Waiting for action
In fact, the backhoe loaders and excavators contribute nearly 60 per cent to the total equipment market in India. For the first quarter of the current financial year, backhoe loaders have grown by 3 per cent and excavators have grown by 9 per cent. However, the same have declined by 7 per cent and 14 per cent in July 2012; and by 16 per cent and 23 per cent in August 2012 on YOY basis. The numbers for September 2012 are expected to be in the same range. Based on the current trends, the CE market is expected to remain flat for the current year. Despite the current challenges, Off-Highway Research is positive about the long term prospects of the construction equipment market. Off-Highway Research forecasts an increase of sales figures of earthmoving equipment of 16 per cent in 2013, 9 per cent in 2014, 11 per cent in 2015 and 10 per cent in 2016.
The government has recently initiated a slew of reforms to stimulate growth. There is an added push in clearance of key infra projects. The Ministry of Forest and Environment (MoEF ) has recently cleared about 80 files relating to road projects, out of 347 road projects which are stuck. The highways ministry has sought some relaxation in issuance of green clearances for NH projects to hasten construction work. But the effect may take some time to percolate. While the government is expected to roll out more reforms soon, the key issue is implementation on the ground. If policy issues are addressed and initiatives are implemented, it will give a boost to the segment and equipment financing in India.