Page 11 - Construction_Opportunities_January_2025

COVER STORY

Fast Facts

 India’s construction equipment industry is projected to
achieve a market size of $25 billion by 2030, reflecting
robust growth driven by substantial infrastructure
development and increased government spending.
 This expansion is bolstered by significant investments in
projects such as roads, highway, railways, and urban
infrastructure, fuelling the demand for advanced
construction machinery.
 The construction equipment manufacturing in India
has come a long way from being largely imported
in the early to late nineties to a large part being
manufactured locally to cater to the evolving customer
requirements and tough local operating conditions.
 The government has been working towards improving
the ease of doing business and creating a robust
infrastructure to attract investment and improve the
overall competitiveness of the domestic manufacturing
industry.

prioritizing infrastructure investment over the coming years, within
the constraints of fiscal consolidation. This will keep domestic
demand prospects of the MCE industry favourable and the
supply-side needs to keep pace to support it. While the industry
has a domestic manufacturing base
with the indigenization levels varying
across the equipment categories, it has
high import dependence and provides
significant scope for development.
Improved localization will not only shield
the supply chain from geopolitical risks
and improve operational efficiency but also help create more
job opportunities,” said Ritu Goswami, Sector Head – Corporate
Ratings, ICRA.
According to ICRA, some of the key factors driving the high levels
of imports include viability issues for the component vendors
due to insufficient domestic demand and limited exports (due
to cost disadvantage and lagging emission standards for a few
equipment categories) and unavailability of certain raw materials
(e.g. specialty steel).
However, factors supportive of increased industry localization
The Indian mining and construction equipment (MCE) industry is include increasing domestic demand (CAGR of 12% over the
the third largest in the world in terms of volumes sold. However, it last decade) and the PLI scheme for complementary sectors like
imports nearly 50% of its component requirement (by value) from specialty steel and auto components in addition to the shifting
suppliers based out of China, Japan, and South Korea, among geo-political dynamics with the China+1 policy being adopted
others. Components like hydraulics, undercarriages, and high-tech by the global OEMs to diversify their supply chains. “At a macro
electronics like electronic control units (ECUs), sensors, telematics, level, the GoI has been working towards improving the ease of
etc., are generally imported. In addition, certain high tonnage doing business and creating a robust infrastructure to attract
fully built machinery, and some steel alloy grades are also investment and improve the overall competitiveness of the
imported. According to ICRA, the imported components are either domestic manufacturing industry,” the report stated.
technology-intensive parts or require large scale manufacturing
to attain economic viability. The Ground is SET…
“Given its vision to become a US$7 trillion economy by 2030 The ‘Make in India’ initiative by the Government has had a
and the multiplier effect of infrastructure development on significant impact on the construction equipment sector. It has
economic growth, the Government is expected to keep incentivized companies to manufacture their products locally,

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