Page 57 - Built Expressions - Online Construction Magazine - November 2014 Issue

bulk of construction growth is likely to come from growth in transportation infrastructure (roads, rail, airports, ports), urban infrastructure (mass rail transit systems, water supply and sanitation, urban housing) and rural infrastructure (rural roads, irrigation, rural housing)—three important sectors for driving ECE demand. With signifcant infrastructure growth expected in India, we expect ECE stock to exhibit robust growth in the near future. Market overview The ECE market is expected to grow by a healthy 20 to 25 % over the next few years to reach 330,000 to 450,000 Fig 1 - Sales of earthmoving and construction equipment are expected to rise in India units sold in 2020, from current levels of about 76,000 units. This would imply a $16 billion to $21 billion of a lack of access but are slowly about $1 trillion (INR 55 lakh crores) market, up from today’s $3 billion. The adopting ECE. earmarked for investment. sector will continue to be dominated • Growing urbanization: Urbanization Five sectors account for more by backhoe loaders (more than 40 % of will drive the demand for construction than 80% of total planned spending: total demand), but broad-based growth to meet residential, commercial, and electricity, telecom, roads and bridges, is expected across products, with each infrastructure development needs. irrigation, and railways, including segment expected to see double-digit • Increased affordability: New mass rapid transit systems. Overall, th growth. A rise in the use of concrete players entering the market have the 11 FYP saw a signifcant rise in will also create demand for concrete made competition stiffer, thereby infrastructure investment, with 24 equipment in infrastructure and making ECE more affordable. This lakh crores invested. This represents housing projects(Fig 1). will further deepen the markets to an overall increase of 70% compared th cover users with ECE needs and to the 10 FYP. factors That Propel the industry previously low access. More than 80% of private-sector forward • Better availability of fnancing: spending will continue to focus on • Fundamental growth from More fnancing of ECE and the four sectors: telecom, electricity, roads end-user industry: Demand will increased use of rentals will create and bridges, and renewable energy. continue to rise as a result of growth wider use by encouraging users Private investment in infrastructure in traditional end-user industries, that don’t necessarily want to own is expected to increase from 37% in th including construction and mining. equipment. The rental market in the 11th FYP to 48% in the 12 FYP. • Higher adoption in traditional particular is expected to pick up in This growth is expected to be spurred applications to speed up tier 2 and tier 3 towns, where growth by private players’ expected capacity projects: Increased use of ECE in will be driven by small contractors expansion and their ability to provide previously traditional applications doing construction work. good quality, timely service while will give rise to new demand in keeping costs low. applications such as digging and soil infrastructure investment in the th loading, especially in time-sensitive 12 five-year Plan Challenges to Achieving projects. India’s need for infrastructure infrastructure Targets • ECE demand from new development is also well supported The infrastructure investment applications: Demand is also by the government’s intentions as targets outlined by the government expected to grow in new segments outlined in the 12th Five-Year Plan are aggressive and signal a positive such as agriculture, which have not (FYP). Infrastructure is one of the intent, which could mean huge historically been ECE users because plan’s primary areas for spending, with potential for India’s ECE industry. Vol: 3 Issue: 11 November 2014 Built Expressions PG 57