The construction equipment industry plays a key role in enabling infrastructure development, driving economic development and making a significant contribution to the GDP. Government initiatives such as the National Infrastructure Pipeline, the PM Gati Shakti National Master Plan, the Bharatmala and Sagarmala Pariyojana, the construction of dedicated freight corridors and high speed rail systems, and the development of greenfield airports, ports and urban rail-based transit systems have provided an impetus to the construction business.
Moreover, the focus on building domestic manufacturing capacity under the Make in India initiative has positively impacted the sector. In recent years, construction activity has reached unprecedented levels, creating a ripple effect that has increased demand across the sector, particularly in the associated equipment sales segment.
Dynamic leaps
In terms of growth, the year 2021-22 was an outlier for the industry, impacted by Covid-19 waves, cyclones in southern India, supply chain disruptions, input price hikes, etc. Road construction slowed during this period and the shift to CEV-IV norms added to the pressure on manufacturers. The overall equipment sales stood at around 85,385 units.
The trend reversed in 2022-23, with a significant growth of 26 per cent in sales volumes, reaching 107,779 units, an industry first. The growth was driven by the government’s infrastructure agenda and pre-election focus on pipeline projects, resulting in positive performance across all equipment segments.
The momentum continued in 2023-24, with the total equipment sales surpassing 135,650 units, exceeding all projections. Two key drivers were an increased pace of road construction and a proposed budgetary capex of Rs 10 trillion. Meanwhile, the demand for mining equipment such as high capacity excavators, motor graders and dozers increased due to increased coal production driven by a greater focus on power generation.
In 2024-25, the industry is expected to witness cyclical growth. In the first quarter, equipment sales grew by 5 per cent on a year-on-year basis to 28,902 units from 27,577 units in the first quarter of 2023-24. Considering the industry’s track record, this modest growth can be attributed to low infrastructure spend and stalled construction activity across sectors. However, with the general elections now over, construction activity has resumed. The revival is expected to sustain this growth momentum throughout the rest of 2024-25.
Greener gears
Climate change and resource scarcity have become critical issues. As a result, sustainability and environmentally friendly construction techniques are gaining traction, with even niche sectors such as equipment manufacturing committing to greener practices.
Various efforts in the form of mandates, policies and construction practices have helped reduce the carbon footprint and emissions across various construction projects. A key part of the industry’s environmental commitment is the pursuit of a zero-landfill status, aimed at reducing waste and mitigating environmental impact.
In recent years, accelerated infrastructure development in India, driven by government initiatives, has significantly increased construction and demolition (C&D) waste. Industry estimates indicate an annual C&D waste production of 150-500 million tonnes in India. To this end, in September 2024, the Ministry of Road Transport and Highways (MoRTH) issued guidelines to promote the use of urban solid waste in national highway construction.
The adoption of alternative sustainable materials has been on the rise. Modified bitumen, plastic waste, eco-friendly concrete, geosynthetics and fly ash are increasingly being used for road construction. Green cement and steel are also seeing wider adoption. In January 2024, India’s first national highway steel slag road section, on the Mumbai-Goa NH-66 (Indapur-Panvel section), was inaugurated. The Green National Highway Project is also making significant strides in this direction by encouraging the use of local materials and bio engineering measures for slope protection. These include innovative techniques such as coco fibre and jute erosion control blankets, shrub or grass plantation, hydroseeding and shotcrete crib walls with vegetation.
Infrastructure sectors are increasingly adopting and mandating sustainable practices, signalling a shift towards eco-conscious development.
In May 2023, the Ministry of Ports, Shipping and Waterways launched the Harit Sagar Green Port Guidelines. These guidelines aim to minimise the impact on biotic components of the harbour ecosystem and promote the use of clean/green energy in port operations. They also focus on developing storage, handling and bunkering capabilities for greener fuels such as green hydrogen, green ammonia and green methanol/ethanol.
In the aviation sector, solar power installations by airport operators have been one of the key drivers of the green transition. Airports in Hyderabad, Delhi, Mumbai and Bengaluru now generate solar energy for operations. In addition, the Kempegowda International Airport in Bengaluru has repurposed over 80 metric tonnes of plastic waste for road construction.
In the railway sector, the Udhampur-Srinagar-Baramulla rail link project has achieved an impressive 80 per cent reduction in carbon emissions by utilising tunnel muck. Indian Railways has also gained global recognition for its ambitious goal of achieving 100 per cent electrification across all rail lines.
The road sector is planning to develop electric highways, supported by charging infrastructure powered by green energy.
Electric equipment evolution
The recent shift towards electric construction equipment reflects a broader trend in the construction equipment industry towards sustainability, efficiency and innovation.
Case Construction Equipment launched its first electric vehicle (EV) products in 2023 – the CX15EV mini excavator and the SL22EV small articulated loader. Subsequently, it launched 580EV, the industry’s first purpose-built electric backhoe loader. This is designed to deliver up to eight hours of operational runtime on a single charge with the same loading, digging and breakout forces as the company’s popular 580 SN diesel model.
In September 2024, Kobelco Construction Equipment India launched SK80, an Indian-made 8 tonne category excavator, with features such as superior technology, advanced hydraulic system, operator comfort, durability, maintenance and better fuel efficiency with lower fuel consumption and emissions.
In August 2024, Godrej & Boyce introduced the country’s first lithium-ion battery-powered forklift trucks featuring an indigenously developed battery management system. The Li-ion batteries offer an extended lifespan and can recharge from 20 per cent to 80 per cent in 2.5 hours.
In addition, Hitachi’s EH 3500AC-3 (a 190 tonne dump truck) has been successfully operating in India, demonstrating technological excellence within the mining sector.
Pre-emptive policy action
Although the electric construction vehicle market is still in its early stages, the government aims to implement strong safety regulations from the outset.
The MoRTH has proposed new rules requiring all electric construction vehicles, including dumpers and excavators, to comply with strict safety standards starting October 1, 2024. The draft notification, released on August 14, proposes an amendment to the Central Motor Vehicles Rules, 1989. The amendment introduces a new rule, 125-O, which mandates compliance with Automotive Industry Standards (AIS)-174, which focus on battery safety, electrical systems and overall vehicle design. By prioritising stringent safety measures from the beginning, the government aims to promote both safety and innovation in the industry.
Growth on the horizon
The growth of the sector is closely tied to key demand drivers such as road construction, irrigation, urban rail development and mining operations. These sectors align with the government’s long-term priorities and vision. In the near future, construction equipment sales, the primary driver of the sector, may experience fluctuations due to periodic market disruptions. However, these are not setbacks and are unlikely to hinder long-term progress.
Going forward, it will be essential to strike a balance between construction activities and environmental conservation to effectively reduce the country’s carbon footprint. Both project contractors and the government are increasingly conscious of this, with policy and project execution efforts already underway. Wider adoption of sustainable materials and construction practices is expected in the future.
Recently, rural India has been a major contributor to equipment sales, accounting for around 65 per cent of total sales.
This equipment is being used for niche projects such as pond construction and rural roads. With the approval of the Pradhan Mantri Gram Sadak Yojana – IV, involving an outlay of over Rs 700 billion, demand in the construction equipment sector is expected to increase significantly in the coming months.
Harman Mangat