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Need for better infrastructure is always the top priority of any country. India is no different as the quest for superior infrastructure continues with many large-scale projects coming up. In this scenario, it is imperative for the infrastructure equipment sector to realign to meet the escalating demands. <p></p> <p> India has been witnessing major changes in its infrastructure space with projects growing bigger and execution deadline getting shorter. We have seen many big ticket projects commissioning recently. Also, there are many large-scale projects in various infrastructure spaces underway which have tight execution deadlines. In this scenario, there is a heightened focus on advanced equipment that can help a faster and qualitative project execution. </p> <p> <span style="font-weight: bold;">Ongoing infra developments</span><br /> While roads and highways sector is leading the development growth, segments such as Railways, airports and ports are also in the fray in the form of railway corridors, metro rail projects, airport infrastructure development under the UDAN regional connectivity scheme, and port infrastructure development under Sagarmala initiative. While Bharatmala Pariyojana stresses on the development of highway network in the country, the Pradhan Mantri Gram Sadak Yojana (PMGSY) provides added thrust on the development of rural roads across the country. The Interim Budget 2019 has allocation of Rs 190 billion for PMGSY. </p> <p> According to CRISIL Research, the National Highways Authority of India (NHAI) had awarded ~7,400 km in fiscal 2018. As of mid-January 2019, tenders for about 6,000 km have been floated by the NHAI. </p> <p> <span style="font-weight: bold;">Projects of the future </span><br /> A slew of new announcements for infrastructure development in the country has been done by the government recently including road and rail connectivity between the metro cities through expressways and high-speed rail corridors. A total of 200,000 km national highways are expected to be completed by 2022.Government is planning to invest US$1.83 billion for development of airport infrastructure along with aviation navigation services by 2026. The capacity addition at ports is expected to grow at a CAGR of 5-6 per cent till 2022, thereby adding 275-325 MT of capacity. Ministry of Shipping has set a target capacity of over 3,130 MMT by 2020, which would be driven by participation from the private sector. Non-major ports are expected to generate over 50 per cent of this capacity. Within the ports sector, projects worth an investment of US$10 billion have been identified and will be awarded over the coming five years. </p> <p>According to CRISIL, the overall project awarding in the roads and highways sector in fiscal 2019 is expected to be in the range of 4,000-4,500 km. In fiscal 2020, the awarding is expected to improve marginally to 4,500-5,000 km. The average annual awarding is expected to be higher over fiscals 2019-2023 compared with the past five years on account of strong pipeline of projects, backed by the Bharatmala Pariyojana, and delegation of increased autonomy to the NHAI.</p> <p>CRISIL Research expects investments to the tune of Rs 450-480 billion in airport infrastructure between fiscals 2019 and 2023, compared with estimated investments of Rs 200-225 billion over the past five years. </p> <p>Meanwhile, Indian ports are expected to see capacity additions of about 325-375 MT in the next five years, riding on new container handling facilities coming up. </p> <p> <span style="font-weight: bold;">CE market needs to realign</span><br /> Considering the scale up in the infrastructure projects in future, construction equipment stakeholders need to gear up with an efficient movement of various class of equipment across the value chain to meet the emerging demands. Each link in the equipment value chain viz, OEMs, dealers, rental players, financiers, equipment users and of course the government have to come together with a holistic approach for the real growth of the market. In spite of the positive sentiments in the market, there have some hindrances that stood as hurdles in the growth path of the industry that slowed down the market, though in short term. </p> <p>Equipment OEMs are now focusing more on new technologies and features in their equipment that promote efficiency and productivity across various functions. The users are giving prominence to technology over cost in their purchase decisions. Rental market is imperative in the construction industry for a continuous movement of equipment to effectively utilise the equipment for timely project execution. While rental market dominates in developed countries in the equipment market, it is largely unorganised in India and still to improve in overall efficiency. There are still many hurdles to overcome for organised approach, unified rental rates and policy support. Construction is a highly capital-intensive sector as more than 30 per cent of the project cost falls into equipment cost. In most cases, financing is a major factor that drives the purchase of equipment. Equipment finance market has grown over the years along with the infrastructure and equipment market growth. The market needs to gear up to the growing financing needs in future. </p> <p>Skill development is a major area that the construction equipment segment is lagging. With the equipment market is growing in numbers and technologies, the skill gap is also growing proportionally, as adequate skill development is not happening. However, the initiatives by the Infrastructure Equipment Skill Council (IESC) to educate and update the skill levels of the operators are commendable. </p> <p>Overall, the construction equipment value chain has geared up to meet the emerging demands from the infrastructure sector. In spite of this, there needs to be a further realignment in approach to effectively meet the requirements and stay firm in the long run. The following interview and articles elaborate more on this.</p>