India's construction equipment industry defies cooling-off forecast, projects over 20% growth by FY24 end

Defying an expected cooling-off, India's construction equipment industry is on track to surpass its previous high of last fiscal year. It is slated to reach  1.25–1.30 lakh units by the end of FY24, clocking more than 20% growth on a year on year basis. 

The development comes on top of the 26% year-on-year growth that the industry witnessed in FY23, surpassing 100,000-unit sales for the second year in a row.

, MD, Volvo Construction Equipment (India), told Autocar Professional that demand was expected to cool down starting in December on account of elections and related reasons. However, with the strong volume of sales continuing in November, the anticipated slowdown has yet to kick in and may happen during the January–March period, as it happens historically in the run-up to the elections.

"So far, it has been very strong growth. On a calendar year basis, CY23 over CY22 is about 18–20%, depending on different products. However, for the fiscal year, it is slightly more than 20% overall," Krishnan noted on the sidelines of the Excon 2023 event held in Bengaluru.

"Globally, the demand is softening in most places. It has not yet softened in India," he continued while alluding to the slowdown in some of the markets, such as in Europe and the US, among others.

According to Krishnan, the key drivers for demand sustainability have been infrastructure growth in general. For instance, in the real estate sector, both segments, including residential and commercial, are doing well. Secondly, on the urban infrastructure side, the industry seems to be seeing a lot of work under progress, especially in the metro rails, which is happening in almost all the major cities of the country currently. Likewise, with railways taking up massive developments, there is a strong demand for construction equipment products, especially in the embankments, which require jobs more suited to cutting and filling.

Further, in road construction, the industry is seing a lot of projects being executed, setting strong demand for the segment. Lastly, the mining segment is also firing on all cylinders, especially the coal segment, which has never seen such growth before, with plans to increase all India coal production 1 billion metric tonnes by FY24. "We are seeing a very strong recovery. Iron ore mining is also doing well. In the coming year, with a lot of rare metal blocks coming for auction, I expect things will only accelerate from here on," Krishnan remarked.

Industry outlook 

Offering an outlook for the industry, he claims that while demand remains buoyant, the fiscal year 2024–2025 is likely to witness a drop in growth, apparently on the back of the large base of the previous years. "My guess is a 12–15% drop," Krishnan continued, before explaining that the recently held state elections where the incumbent regimes won, led to an increased sentiment about project continuation.

Meanwhile, on Tuesday, Volvo Construction Equipment (India) launched the EC500 Electric, a grid-connected electric excavator in the 50-ton class. In addition, the company also showcased its L120 electric wheel loader as a pilot launch, offering a glimpse into the equipment's material handling capabilities at locations such as ports, mines, plants, and other construction sites. EC80 Electric, which is an addition to its already existing compact EC55 Electric, used for urban construction and forestry, was also showcased as a near-production prototype. Furthermore, India developed and designed the electric compactors DD40 and PT220, which were also showcased as technology concepts.