Sectoral Capsule - Opportunities in Indian Construction Equipment Market in India
Driven mainly by the Asian markets, the global construction equipment industry has recovered considerably from 2009, to register revenues of USD XX billion in 2012 as against USD XX billion in 2011. The global demand for construction began to plummet in 2008 due to a worldwide economic meltdown. Moreover, with sales revenue declining XX percent in the developed markets due to liquidity crunch and declining demand, the industry has set its sights on the developing countries. It plans to push sales revenue over USD XX billion by 2017 by meeting the growing infrastructure demands of the developing countries.
The construction sector in India has witnessed exceptional growth fuelled by development of physical infrastructure in the last decade. The increasing significance of the sector in the country’s economic growth was evidenced during the implementation of the Eleventh Plan (2007-2012). Construction activities in areas such as transportation, irrigation, housing, urban development, and civil aviation received greater importance in terms of outlay as well as implementation.
The global economic downtrend in 2009 had a severe impact on the Indian construction equipment industry. However, the market has since shown a steady recovery and current indicators point toward a strong growth outlook for the next five years. Notwithstanding the impact of the global crisis, the Indian economy remained buoyant and recovered strongly in 2010, registering one of the fastest growth rates in the world, second only to China.
The demand for construction equipment is associated with investments in infrastructure and construction activities. The share of construction in India’s GDP (as percentage of total GDP) is consistently growing for the past 10 years, during which it rose to XX percent from XX percent. Across the infrastructure spectrum, the investment multiple of the sector is set to grow by XX times on an average. Thus, the environment is ready for a long and sustained growth in the demand for construction equipment. The top four sectors with investments potentials are urban infrastructure, ports, power and roads. According to the World Bank, India is the second largest country in terms of projects relating to Public Private Partnership (PPP). Thus government stimulus in promoting PPP models would further propel the growth of construction equipment market in the country.