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Indian Construction Equipments Industry Analysis: Oct 2014

October, 2014

The construction equipment industry's revenues are estimated to reach US$ 22.7 billion by 2020 from US$ 5.1 billion in FY12. Unit sale of construction equipment is expected to grow to 82,000 by 2016 from 61,745 in FY12. Construction equipment forms around seven to eight per cent of gross domestic product (GDP) and gives employment to more than 30 million people in the country. It also accounts for more than 60 per cent in total infrastructural investment.

The demand for construction equipment in India is expected to grow to US$ 9.9 billion by 2015, at a compound annual growth rate (CAGR) of 24.1 per cent (from 2011). Increased impetus to develop infrastructure in the country is attracting the major global players. There were cumulative foreign direct investment (FDI) inflows of US$ 209.4 million in earth-moving machinery in the period April 2000-March 2014.

The Government of India has de-licensed the material handling equipment industry and has allowed 100 per cent FDI under the direct route. It has also given approval to some financial institutions to raise money through tax-free bonds. In the interim budget 2014-15, excise duty was cut by two per cent.

The private sector's share has expanded across key infrastructure segments, ranging from roads and communications to power and airports. Of the total planned infrastructure investments worth US$ 1 trillion during the 12th Five-Year Plan, the share of the private sector is estimated to be 47 per cent, up from 25 per cent during the 10th Five-Year Plan.

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