Polls, project delays hit construction equipment market

NEW DELHI: Sales of heavy construction equipment, a key barometer of growth of infrastructure projects, such as roads and highways, airports, ports, industrial parks and mining, grew at its slowest in the last financial year. Restrictions on the announcement of new projects due to election rules as well as a slowdown in ongoing central and state projects, led to a contraction in demand.

Against healthy double-digit growths recorded previously, the industry saw a 3% rise in FY25, with purchases of heavy equipment slowing down uncharacteristically. The Rs 86,000 crore construction equipment industry, a key contributor to almost all the large infrastructure projects across the country, grew by 24% in FY24 and 21% in the year before that, according to data sourced from the Indian Construction Equipment Manufacturers Association (ICEMA).

Companies, such as Caterpillar, JCB, Tata Hitachi Construction Machinery, Cummins, and Volvo CE are major providers of machinery.

ICEMA president V Vivekanand, who is also MD of the Indian subsidiary of Caterpillar, said restrictions on new project announcements due to the model code of conduct before elections saw the central govt, as well as some states (which also went to polls), delay new project announcements. .

Vivekanand told TOI that even the infrastructure activities slowed down during the year. "The pace of execution is a cause of concern. The pace of construction of roads has slowed down, not just the national highways but even the rural roads. Sometimes the projects were not delivered on time, and in other cases, the projects were not awarded on time and thus got delayed. Even in mining, demand was muted for the past 15 months."

Deepak Shetty, CEO & MD of Indian operations of British manufacturer JCB, said payments to contractors were believed to have been delayed in many states, which led to a slowdown in purchases of new equipment. "Work on many state highways has also slowed down. In some cases, there is a lack of availability of funds for infrastructure projects."

Sandeep Singh, MD of Tata Hitachi, said "resolution of challenges in execution" of projects is key to kickstart demand.

"Govt support, in the form of incentives for both manufacturers and end-users, could accelerate this transition. Inclusion of construction equipment in the PM e-drive scheme and reduction of GST on electric machines are potential enablers," said Dimitrov Krishnan, MD of Volvo CE India.

Jaideep Shekhar, the India MD of Terex, which is an American manufacturer of materials processing machinery, waste, and recycling equipment, said the industry remains optimistic about registering better growth going forward. "The outlook remains positive, buoyed by the govt's emphasis on infrastructure development."


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