Infrastructure remains as the core determinant of development for any nation. But, to ensure and realise such measures, availability of hassle-free fund flows is a must. With the Indian Government remaining gung ho over its ambitious array of big-ticket and face-lifting projects, the opportunities expected from the construction segment is immense. The evolving infra-constructional development has given an optimistic cheer to the equipment and allied sectors.
While roads and highways continue to hold the major share in pulling the equipment demand index, the opening up of mining sector has broadened the scope of opportunities. Adding to this are the urban rejuvenation programmes, tier-II and tier-III upliftment measures, irrigation and water conservation projects that has opened a new spectrum for the equipment manufacturers. Despite these opportunities the industry had to face its fair share of slowdown owing to the market and economic volatilities – in turning limiting the hassle-free flow of funds.
The Funding Need
As per a recent study released by the China-led Asian Infrastructure Investment Bank, the cost of infrastructure financing in India is anticipated to scale up over the next one year. Global economic conditions, higher borrowing rates and geopolitical volatilities were pointed as the areas of concern affecting the investors while chipping in finance for the infra and allied sectors.
The market experts see the construction equipment industry today at a value of USD 4.3 billion. Feedback Business Consultancy in its report forecasts the industry volumes to spike up to over 1,20,000 units by 2021, growing at a CAGR of 20 per cent. The current industry volumes are close to 75000 units. Policy changes in the infrastructure segment are expected to boost the Equipment industry to an estimated USD 7.5 billion by 2020. A study by the Off-Highway Research Indian Annual Review 2019, construction equipment sales in India grew 17 per cent in 2017-18, building on the 36 per cent witnessed in 2018-19.
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Tepid Demand: Awaiting Projects Execution
The industry has a tepid demand in 2019. However, towards the end of the year there were signs of revival and the industry is hopeful to clock 8-10 percent growth in FY2020-21. But, it all depends on how sooner the government’s projects are put on track.
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