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Strategic Outlook for Construction and Mining Equipment Market in India

  • July 2014
  • -
  • Frost & Sullivan
  • -
  • 111 pages

Summary

Table of Contents

Construction and Mining Equipment Market in India Poised to Experience Demand of Over 160 Thousand Units by 2018

Total demand for select construction and mining equipment market in India was found to be 105,811 units in FY2013. The market for new C&ME is likely to grow at a CAGR of 9.6% to 166,876 units in FY2018. Large allocations by government to public projects such as NHDP, Metro, and BRTS in India and strong emphasis on construction and real estate is likely to push demand for the construction and mining equipment. Government projects would account for 80% of the total demand. Mega projects and infrastructure development will fuel the demand for construction machinery and is expected to lead to a general shift towards higher-tonnage segments, e.g. Dumpers to shift from 50-100T to 100-150T segment.

Executive Summary—Key Findings for Construction and Mining Equipment Market
1 Total demand for select construction and mining equipment (C&ME) market in India was found to be units in FY2013. The market for new C&ME is likely to grow at a CAGR of % to units in FY2018
2 Large allocation by government to public projects such as National Highway Development Project (NHDP), Metro and Bus Rapid Transport System (BRTS) in India and strong emphasis on construction and real estate are likely to push the demand for Construction and mining equipment. Government projects to account for % of the total demand
3 Dominance of foreign OEMs is likely to continue in the future as well. The top five OEMs—Caterpillar, L&T Komatsu, JCB, Tata Hitachi and BEML account for % of all units shipped in FY2013
4 Mega projects and infrastructure development will fuel the demand for construction machinery and is expected to lead to a general shift towards higher-tonnage segments, for instance, Dumpers would shift from-T to -T segment
5 With global OEMs setting up local manufacturing facilities, India is expected to become an export hub primarily for Asia and Africa. For instance, JCB is opening up new export market for backhoe loaders and excavators in South East Asia, Middle East and Africa
6 Due to absence of proper fuel emission standards, the region is likely to witness delay in introduction of key vehicle engine technology compared to European and American standards

Executive Summary—SWOT Analysis
Technology for higher-tonnage equipment is not easily available in India, majority of the components need to be imported.
C&ME Market: SWOT Analysis, India, FY2013

OPPORTUNITY
-Large investment in construction, infrastructure (NHDP, BTRS) and mining sectors
-High demand forecast
-Localized products with competitive pricing can penetrate market with ease
-Large number of NHDP projects (~40%) yet to be allocated
-Mechanization of road-maintenance activities will boost demand
-Increasing real estate development and high-rise apartments (>6 floors) in urban areas
THREAT
-Inadequate availability of trained operators
-High dependence on mega projects
-Technologically-superior, truck-mounted cranes are a threat to pick & carry cranes owing to better quality
-Shutting down of mines due to environmental concerns
-No medium/small-level customers for heavy equipment
-Entry of Chinese competitors with low-cost products
WEAKNESS
-Capital-intensive product
-Technology for higher-tonnage equipment not available easily in India, majority of the components need to be imported
-Higher lifecycle of product leading to lesser need for frequent replacement
-Well-established competition with wide service networks leading to high entry barrier
-Pick & Carry cranes by Indian manufacturers are seen as poor in quality by customers
-High dependence on Government financed projects
-Localized and temporary demand for concrete equipment, which fluctuates greatly with need
STRENGTH
-High revenue-generating products
-Must-have for all construction and mining projects
-High resale value for established brands
-Versatile equipment (backhoe loaders, skid steer loaders) generate high demand from different sectors
-Use of specialized equipment (excavators, pipe layers) gaining acceptance among contractors due to higher efficiency and lower turnaround times
-Legal mandate for contractors to have road-laying equipment at hand for bidding on projects
-Need to move concrete over long distances efficiently

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