Construction equipment sales may grow 15-20% this fiscal

Sales of construction equipment - a barometer of economic activity - are expected to increase in healthy double digits in the ongoing financial year on the back of increased government spending on infrastructure projects, especially in rural areas.

The industry estimates sales of construction equipment (domestic sales and exports) to grow 15-20% in FY23, compared with an 8% fall last fiscal year. Even though exports grew 60.5% to 7,802 units in FY22, local sales fell 11.4% to 77,583 units.

"Last fiscal, the industry output declined by about 8% due to a fall in demand for road construction and earth-moving equipment," said Deepak Shetty, managing director at market leader JCB India, while adding that the government's focus on infrastructure investment to increase economic activity would, in turn, also help boost demand for them. But a steep rise in input costs and constraints in the supply chain are concerns, he said. The central government has budgeted a 36% increase in its capital spending to a record ₹7.5 lakh crore this fiscal year, with a special focus on infrastructure development to spur growth. It has expanded the scope of the National Infrastructure Pipeline to include 9,335 projects (from 6,835 projects at the time of launch), with total envisaged investments ₹108 lakh crore during FY20-FY25, minister of state for finance Pankaj Chaudhary told the Lok Sabha in March.

Among others, the scheme to provide piped drinking water to rural homes, building of smart cities, commencement of new metro rail development projects and construction of new airports at Navi Mumbai (Maharashtra) and Jewar (Uttar Pradesh) will trigger growth for the construction equipment industry, said Shetty.

The PM Shakti national master plan is a path-breaking initiative, which will bring holistic focus on infrastructure development, he added. He predicted India to become the second largest market for construction equipment by the end of the decade.