The demand for construction equipment in India is expected to grow to US$ 9.9 billion by 2015, a compound annual growth rate (CAGR) of 24.1 per cent (from 2011). The construction equipment industry’s revenues are expected to reach US$ 22.7 billion by 2020 from US$ 5.1 billion in FY 12. Unit sale of construction equipment is expected to grow to 82,000 by 2016 from 61,745 in FY 12.
The private sector is emerging as a key player across various 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.
Investments in infrastructure are the main growth drivers of the construction equipment industry. The Planning Commission estimates total infrastructure spending to be about 10 per cent of gross domestic product (GDP) during the 12th Five-Year Plan (2012–17), up from 7.6 per cent during the previous plan (2007–12). The Government of India has de-licensed the material handling equipment industry and allowed 100 per cent foreign direct investment (FDI) under the direct route. The government has also given approval to some financial institutions to raise money through tax-free bonds.
The equipment rental and leasing business in India is smaller compared to Japan, USA and China. Demand for rental equipment is set to witness strong growth in the medium term due to large investments in infrastructure. New players can also explore opportunities in the equipment finance business.