The road to the revival of the road construction equipment sector akin to the construction equipment sector rests a lot on government sponsored projects. From state inaction in 2013 to state in action in 2020, it will be interesting to see how this plays out.

Connectivity is an essential element of our individual lives. In our built environment too connectivity is important for growth and development. There are number of factors which facilitates this connectivity and roads play a major part in establishing it. Connecting cities to towns, towns to villages and countries to nations, it brings to life an eco-system where businesses can thrive and the economy can prosper.

So it’s no wonder that each passing government lays a lot of emphasis on road construction and infrastructure. Likewise the road construction equipment sector banks heavily on the government’s outlook and policies on roads and infrastructure building. Back in 2014 when the BJP acquired power by a huge margin, the manifesto had a clear focus on roads and highways, this focus lead to ache din for all the stakeholders for the road construction and construction equipment industry. But post 2018 a slowdown akin to what the industry witnessed in 2013 has come into play which has dampened the market sentiments.

Jasmeet Singh, Head – Corporate Communication and Corporate Relations, JCB India Ltd points out, “After a strong 2018, the earthmoving and construction equipment Industry saw demand compression in 2019. The slowdown was attributed to a variety of factors. 2019 being an election year contributed to the overall stress along with other challenges around liquidity and fresh investments.”

Though the industry thrives on optimism which was evident at the Excon fair last year the road construction equipment manufacturers continue to remain in a cautious mode

Hemant Mathur, Hemant Mathur, Asst VP-Sales and Marketing , Tata Hitachi Construction Machinery Co Pvt Ltd points out “To put it very simply, I think the markets have bottomed out. The general atmosphere at Excon – and based on the inputs given by the Minister of Road Transport and Highways of India, Nitin Gadkari and Chief Minister of Karnataka BS Yediyuruppa – the slump in the construction sector will be arrested. The pace at which the sector picks up remains to be seen but the sentiment seems to be improving. In 2020 we’re looking at a 14 per cent growth in turnover compared to 2019.

The market condition has been tough. Following which the government has closely monitored this condition and accordingly devised plans for its revival. These plans were discussed in detail by Nitin Gadkari, Minister of Road Transport and Highways of India in his inaugural speech in Excon 2019. If the plans discussed is put into action, then it will be a great fillip. Since as long as money goes into building projects, the construction equipment industry becomes a direct beneficiary. Besides the scale of infrastructural developments also gains momentum. Apart from bottlenecks in execution of projects, there is a strain on finances, so some relief in terms of lending is also required.

Much of the optimism which prevails is directly connected to the government’s ambition of investing Rs 100 lakh crore in the infrastructure segment over the next five years. It also banks on the fact that infrastructure will continue to be a key growth driver and address pertinent issues like job creation.

Jasmeet says “The recent announcement of Rs 100 lakh crore in Infrastructure over the next five years is welcome as it comes at a time when the Industry has built capacity and capability over the years, and parts of which have remained under utilised in the immediate past. Infrastructure will continue to be a key growth driver in the investment lead growth philosophy. The Construction Equipment Industry is critical in fulfilling the $5 trillion economy dream of India and as an industry, we are hopeful that with government’s consistent support, all the current hurdles and challenges will soon un-lock significant opportunities in the road equipment and construction sector.”

But to achieve the growth targets as specified by the government. The operations of the entire supply chain needs to be streamlined and disciplined. Wilfried Theissen, Managing Director, Putzmeister India rightly points out “While the country has set very ambitious targets, there are delays in awarding of projects due to land acquisition and other issues. Once projects are underway, payments to contractors get delayed. This impacts the entire ecosystem.”

Like the rest of the construction equipment sector, the concerns of delayed payments has been a matter of concern for the road construction equipment sector too. Likewise the unavailability of funds for potential buyers post the IL&FS crisis was also a major concern. Though there has been an attempt to ease the situation to address the issue, a lot needs to be done.

E Moses, Vice President (Sales & Marketing), Kobelco Construction Equipment (India) Pvt Ltd says “NBFCs plays a very active role in the road lconstruction and infrastructure sector. So a sound policy on NBFCs is desired so that they can function properly. The funds for projects have to be released on time as well. The government should also think about how to get the work done on mutually agreed terms and norms. The govt should also come up with better GST approach for the machines used in the construction industry.

The road to the revival of the road construction sector rests a lot on government sponsored projects. From state inaction in 2013 to state in action in 2020, it will be interesting to see how this plays out.

Having said that building roads alone is not going to address the issue, full scale cities and metropolis have to come into existence. Our colonial rulers designed eight metropolises to facilitate their business goals. Sadly 60 years post-independence we as an independent nation continue to thrive on those metropolises alone. If we are to realize our goal of becoming a developed nation an all-round development of our infrastructure segment is desired. A development where the roads and pathways will function as the roots of the kalpavriksha that our cities, towns and villages can become.

After a strong 2018, the earthmoving and construction equipment Industry saw demand compression in 2019.
Jasmeet Singh, Head – Corporate Communication and Corporate Relations, JCB India Ltd

The pace at which the sector picks up remains to be seen but the sentiment seems to be improving. In 2020 we’re looking at a 14 per cent growth in turnover compared to 2019.
Hemant Mathur, Asst VP-Sales and Marketing, Tata Hitachi Construction Machinery Co Pvt Ltd

While the country has set very ambitious targets, there are delays in awarding of projects due to land acquisition and other issues. Once projects are underway, payments to contractors get delayed. This impacts the entire ecosystem.
Wilfried Theissen, Managing Director, Putzmeister India

NBFCs plays a very active role in the road lconstruction and infrastructure sector. So a sound policy on NBFCs is desired so that they can function properly.
E Moses, Vice President (Sales & Marketing), Kobelco Construction Equipment (India) Pvt Ltd