Government’s largest budget for the National Infrastructure projects by 2025 such factors undeniably will increase the demand

According to you what are the key market trends likely to be seen in these times, the impact it will have for the overall construction equipment industry, specifically your area of business in this sector?

The construction equipment industry has regained momentum with moderate growth of sales at the end of this fiscal year 2020. With the government’s several initiatives like auctioning coal mines on a large scale, Aatmanirbhar Bharat call and restarting the various governmental flagship programs like ‘Smart Cities’, ‘Housing for All’, ‘Make in India’ and ‘Atal Mission’, the CE Industry is gradually attaining the lost glory.

Beating the Covid -19 blues we at Sany India have lodged growth post COVID and we foresee the CE industry to make a comeback with big numbers in the near future

What are the current market drivers and what kind of demand do you foresee?

Rapid Urbanization, Auctioning of Coal mines, Governmental flagship programs like Smart Cities, Housing for All and others several major highway projects are the key market drivers, which are working as catalysts in the growth of the construction equipment industry in India.

Another important factor, which has increased the impetus for Construction equipment industry is the government’s largest budget of Rs 111-lakh-crore for the National Infrastructure Pipeline to cover 6,835 projects by 2025. All these factors undeniably will increase the demand for excavators, backhoe loaders, compaction equipment, crawler excavators, mobile cranes, and wheeled loaders etc.

Which industry segment is likely to be the biggest consumer of construction equipment?

Since the government has laid out its vision plan and has announced the highest ever outlay of ₹1.18 lakh crore financial allocations for the development of highways and roads in its 2021-22 budget. Undoubtedly, the highways and roads would be the biggest consumer of construction equipment.

Some of the flagship corridors and other important projects would see considerable activity in 2021-22. More than 13,000 km of roads at a cost of ₹3.3 lakh crore has already been awarded under the ₹5.35-lakh crore Bharatmala Pariyojana, of which 3,800 km have been constructed. By March 2022, the government would award another 8,500 km and complete an additional 11,000 km of the national highway corridor. It’s noteworthy that the government had left no stone unturned to provide boost to infrastructure in the country.

What is the current market size for construction equipment on lease? Is the industry likely to see consolidation in coming years? Your views.

Though India is expected to become the third-largest construction market globally by 2022, but construction equipment leasing industry is still at a nascent stage in the country, and just accounts for 6 % to 8% of the overall construction equipment market. Factors, such as unfavorable taxes have been the key reasons for the slow growth of construction equipment leasing in India.  However, the CE leasing market is growing progressively with the rapid infrastructure developments in India. And certain alliances can be seen with the Banks and NBFCs to give thrust construction equipment renting or leasing industry in the coming years.

Which equipment demand is likely to be resilient in the days to come and why? Your take?

Excavator is one of the largest segments in the Indian construction equipment industry in value and we think it’s going to be resilient in the coming years. Excavator is one of the equipment which sales growth remained steady during the pandemic period and its current demand-supply is exceptionally at a good position. As per the reports, it is anticipated to witness a strong growth from 2020 to 2025.

Increasing construction activities in the residential sectors and ongoing several major highway projects are providing growth opportunities for the excavators in the market. The availability of excavators in several models to suit applications in road building, forestry, mining, and commercial construction is supporting its wide adoption. Several advantages of excavators, such as the ability to operate in diverse terrains, flexibility to mount additional tools, and high durability are the key factors which significantly increasing its demand in the market.

How is the equipment rental market going to fare? Which are the important factors that could attract demand for the industry? Business model that can work in challenging conditions?

With the stark rise in infrastructure development projects, the construction equipment rental market is also continuously increasing. As per the reports, the India construction equipment rental market is anticipated to register a CAGR of about 5.1 % during the forecast period 2020 – 2025.

There is no denying the fact that despite easing restrictions, we are still going through some difficult market conditions. For the short-term construction application renting machinery has been preferable than purchasing, as it allows optimum utilization of the machinery. The concept of used and refurbished construction equipment has become more relevant under the current market circumstances. It allows for the use of advanced machinery at reduced costs.