India’s construction equipment industry is looking to build on a 31.5% surge in exports, with ICEMA President and JCB India CEO and Managing Director Deepak Shetty expecting developed markets to increasingly drive overseas growth.
Exports now account for around 20% of the industry’s overall production, compared with just 2-3% around five years ago, Shetty said. The shift comes as the domestic construction equipment market remained largely flat last year, while overseas demand provided a significant growth cushion.
“The biggest example of the strength of the industry is when you compete in the global market,” Shetty said. “The growth of 31.5% should give you confidence that today the quality of the machines that we produce, the features on the machines and the various innovations that we carry out are meeting the expectations not only of domestic customers, but of global customers.”
India produced nearly 140,000 construction equipment machines during the year, according to Shetty, the highest ever for the industry.
A key factor supporting the next phase of exports is India’s transition to CEV Stage V emission norms. While the change created short-term challenges for the domestic industry, Shetty said aligning with tighter emission standards has opened access to developed markets.
Global Market Penetration
Unlike some other automotive segments where Indian exports have traditionally found large markets in Africa, Latin America and Southeast Asia, construction equipment is already finding buyers in the US, UK and Europe.
“The largest exports are to USA, UK and Europe,” Shetty said. “When you are able to compete in those markets, you are not then hiding from the quality point of view.”
Shetty, who recently travelled to the US, said the increasing visibility of India-made construction equipment there underlines how the country’s manufacturing base is evolving.
He expects the industry’s developed-market push to widen further. “In the next few years, rather than getting machines, like in the past, from Japan and Korea, we should start exporting to Japan and Korea,” he said.
Policy Levers and Free Trade Agreements
Free trade agreements could provide another lever. Shetty said agreements with developed economies could encourage global manufacturers already operating in India to increase localisation and potentially use their Indian facilities to supply overseas markets.
The proposed production-linked incentive scheme for construction equipment could further strengthen this ecosystem. ICEMA has been in continuous discussions with the government, Shetty said, adding that further clarifications had been sought recently.
“It would not be fair for me to give a time, but I would say in the very near future they should come out,” he said.
Shetty said greater domestic production of critical components could also improve supply predictability. The industry currently depends on overseas markets, including the US, Taiwan and Malaysia, for several electronic components and chips.
Sustainable Logistics & Value Creation
Improving domestic infrastructure is simultaneously lowering the cost of getting Indian-built equipment to export markets. Shetty cited JCB’s Jaipur facility, where better road and rail connectivity has reduced its earlier logistics disadvantage against the company’s Pune operations for movement to JNPT.
JCB is now moving machines by train from six locations across India, which Shetty said costs around one-third as much while also reducing CO2 emissions.
Despite the possibility of competitors responding to India’s export expansion through aggressive pricing, Shetty said Indian manufacturers should avoid competing solely on cost.
“In the international market, there are only two ways to compete. One is to reduce your cost, and second is to give more value,” he said.
“If you want to be relevant, we should not chase the market with cheap products. We should chase the market with innovative products.”