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MOTORINDIA
l
August 2012
157
Furthermore, one has to differen-
tiate between the organized and the
unorganized segment of the sector.
The organized segment consists of
firms and independent contractors
who manage their business on a
more professional basis and oper-
ate on small and medium as well as
large scales. The unorganized seg-
ment primarily consists of stand-
alone contractors that operate at a
small scale.
As far as demand for construc-
tion equipment is concerned, India,
as the world’s seventh largest
country by area and the second
biggest by population, is one of
the most dynamically growing
but largely untapped construc-
tion equipment markets. In the
recent years, the country has
witnessed massive investment in
the construction industry from
both public and private enterprises.
Multi-billion dollar investments
in constructing roads, ports and
power plants and in developing
the telecommunication sector and
urban infrastructure have paved the
way for the construction equip-
ment demand to grow phenom-
enally. Industry experts predict a
faster market growth in the coming
years. From 2010 to 2020 it is esti-
mated to grow six times to a size to
$20-25 billion.
The earth-moving segment, in
particular, has been driving the
overall construction equipment
industry in India, with strong
demand emanating from the
Government-backed infrastructure
projects. The segment is poised to
register a remarkable compound
annual growth rate of around 21
per cent during 2011-2015.
Also expected is significant
growth of infrastructure. The cur-
rent Five-Year Plan which covers
the period up until 2017 envis-
ages doubling of investments in
this sector. Big investments are
planned to expand the energy and
water supply as well as roads.
Further, more ports and airports
are being built.
It is a major task for the con-
struction equipment industry to
adapt to the expected growth.
India’s worldwide market share in
the industry already tripled to six
per cent from 2004 to 2010 and
will continue to grow. Companies
therefore have to adapt on multiple
fronts. One of them is the collabo-
ration with suppliers and another
is improving the competitiveness.
This means, for example, develop-
ment of new products to suit the
customer demands and to con-
tinuously upgrade the skills of the
sales force.
w
The Indian construc-
tion industry is highly
fragmented. This is
partially due to the
fact that, for most
projects, there are no
long-term relationships
between the contrac-
tors and clients. This
is partially due to the
fact that the sector in
many cases lacks econ-
omies of scale. Thus,
smaller players may
have better cost struc-
tures due to lower
overhead costs.
construction equipment
The Indian construction equipment industry has been witnessing a con-
sistent double-digit growth over the past few years. Though the economic
slowdown had its moderate effect on the industry, it regained momentum
in 2010, showing a stupendous growth which is expected to continue in the
years to come.