Excon 2011, the sixth international construction equipment and construction technology trade fair, organised by the Confederation of Indian Industry (CII) from 23-27 November in Bengaluru was an ideal business opportunity for major construction equipment players. While the manufacturers introduced innovations in technology, the user industry got a chance to witness the technology boom happening in the sector.
"Mechanisation is imperative to speed up the implementation of India's infrastructure projects," Dr CP Joshi, Union Minister of Road Transport and Highways, Government of India, said and added that the growth of infrastructure sector is critical for the country to achieve a sustained economic growth in the next ten years.
Delivering the Chief Guest Address at Excon 2011, the minister said that India has emerged as the second largest country in the world in attracting private investment in infrastructure development. India would continue to attract foreign participation as the country has an open and transparent bidding process, standards for various documents and agreements, and a well defined dispute resolution mechanism in highways.
The investment made in infrastructure sector in 2011 accounted for 7.9 per cent of the GDP. The figure is likely to increase to 10.7 per cent by 2017. During the 12th Five Year Plan the infrastructure investment would be in the tune of $1 trillion. The minister said that to fund the infrastructure projects, India should find alternative sources of finance. The government's Infrastructure Investment Fund would soon be coming out with a public issue to raise about Rs 10,000 crore.
He said that the ambitious National Highways Building Programme envisages an investment of about $70 billion in next 5 years with a major share by way of Public Private Partnership (PPP).
Delivering his special address, B Muthuraman, President, CII, said that India should have a solid manufacturing base and quality infrastructure to achieve double digit growth. And to achieve both, the country needs quality construction equipment. He urged the industry to go for high technology absorption, and enhanced design and engineering capability. The industry should try to market itself in a better way so as to attract the best talent. He said that it is important to increase the growth of manufacturing sector. Currently the manufacturing sector contributes about 16 per cent to GDP and 12 per cent to employment. However, it has the potential to increase its contribution to about 25-30 per cent in these two areas.
In his theme address, Vipin Sondhi, Chairman, Excon 2011, said that roads are critical to promote inclusive economic growth in India, and for this reason, infrastructure should continue to remain a dominating theme of the country's growth story.
Quoting the CII-IECIAL Report on The Indian Earthmoving and Construction Equipment Industry Vision 2020: Commanding New Heights, which was released by the Union Minister at the event, Sondhi said that the Indian construction equipment industry is expected to grow at a compounded annual growth rate of about 21 per cent to reach the size of $23 billion by 2020 from the current level of about $3.3 billion. By 2020, the industry is expected to create at least two million skilled jobs in maintenance and operation alone - that is, excluding the jobs in the manufacturing of equipments.
Talking about Excon, he said that the event has assumed international character, attracting over 200 overseas companies, and eight country pavilions. The gross exhibition area had increased from 140,000 sq m in 2009 to 220,000 sq m during the current year.
Providing his take, Glenville da Silva, Chairman, IECIAL said that the government should articulate its environment policy to unleash the potential of the mining and power sector; come up with a new Land Acquisition policy that would speed up road infrastructure and do away with multiple differential taxation systems across state boundaries to support the construction equipment and infrastructure industry.
Silva said that in 2000, when the first edition of Excon was organised, the total number of construction equipments in India was just around 8,000 units. Thanks to the government's ambitious infrastructure projects, the equipment industry grew by seven times over the last yen years. Currently there are about 60,000 units of construction equipments and India's CE industry today account for over 6 per cent of the global market. Quoting the CII Report, he said that during the next decade, India's construction equipment industry is expected to grow six times from the current level, and would have over 3,30,000 units.
In his welcome address, TT Ashok, Chairman, CII Southern Region said that the government should focus on addressing the issues of the industry in land acquisition, rehabilitation, tolls, among others. He remarked that in the last ten years, the construction industry has been driving the economic growth of the country. Government used to be the prime players in the past but today private players drive the growth. The portion of infrastructure investment to GDP has doubled in the last ten years, he said.
Chandrajit Banerjee, Director General, CII, in his concluding remarks, said that the increased size of Excon reflects the upbeat mood in the Indian construction equipment industry which is poised to grow manifold with the entry and expansion of global OEMs.
Over 200 foreign companies showcased their products at Excon. Japan External Trade Organisation (JETRO), a government-related organisation that works to promote mutual trade and investment between Japan and rest of the world, is upbeat on forging tie-ups between the Japanese and Indian construction equipment (CE) makers. Presently, JETRO has managed to bring 13 mid-sized construction equipment manufacturers from Japan to showcase their products and technologies at Excon 2011.
Chinese construction equipment maker Zoomlion Heavy Industry Science and Technology Development Co said Universal Construction Machinery and Equipment would sell its concrete pumps in India. The Chinese firm said depending on demand for Zoomlion's products, it may soon set up an assembly line for trailer concrete pumps in India, but it did not provide any financial details.
Zoomlion and Electromech have announced an alliance to manufacture and sell tower cranes in India. The annou?ncement was made at the Excon 2011.
The event witnessed the launch of over 400 new products by participating companies. Ashok Leyland and John Deere joint venture (50:50) launched its first product, the 435 backhoe loader, which will be marketed under the brand Leyland Deere. The product has been extensively customised for the Indian market and features many firsts in the category.
Hyundai Construction Equipment India, a subsidiary of Hyundai Heavy Industries, Korea, launched their heavy duty excavator RC 340L. Their product, R340LC-7 is amongst the world-class excavators from Hyundai specially designed and manufactured in India for heavy construction, marble, granite and quarry application. Asia Motor Works (AMW) launched its new 1618 TP tipper model. This important new model marks AMW's entry into the competitive 16- tonne segment of the Indian commercial vehicle market. Schwing Stetter India, one of the pioneers of concrete construction equipment in India, unveiled 19 new products in ready-mix concrete technology: concrete mixing equipment, truck mixers, concrete pumps as well as boom pumps. The new range of products will cater to all segments in the concreting business like pre-cast, ready mix concrete, construction in rural areas, hydro-power construction, road construction, metro-rail construction, airports, ports, mass housing and urban infrastructure.
LiuGong Machinery Corp introduced three new machines at Excon, CLG835BSIII and CLG856BSIII wheel loaders, and its CLG414BSIII motor grader. The machines, produced from LiuGong's Pitampura plant in Indore, meet Bharat State III emission standards. The Pune-based Aquarius Engineers has launched new models of concrete line pumps (model 2100 D EHP), concrete boom pumps (20 m height) as well as concrete mobile batching plants (MP 21 & MP 24) at the Excon 2011. These high technology products are completely indigenous and prove to be competitive in price over other import options. Conmat, a pioneer in introducing indigenous efficient twin-shaft mixers of various sizes has launched the very first slipform canal paver made in India at Excon. Kamaz Vectra Motors has launched the Kamaz 6520 tipper model of GVW 25-tonne, a 6x4 heavy dump truck.
Coinciding with Excon 2011, CII organised a CEO's Roundtable on 'Skill Management in Construction Equipment Industry,' IECIAL, an affiliate body of CII, hosted a two-day conference on ECE indu?stry - Vision 2020 and Beyond and a mem?bers' meet by the Builders Association.
At the Excon 2011 seminar on 'Industry Overview and Global Trends', Subhash Chandra Khuntia, Principal Secretary, Karnataka Public Works Department, said that Karnataka is planning to develop 15,000 km of state highways in the next two years. The country's product require?ments are very unique, and diverse. The Indian customers are looking for more versatile and cost-effective products. There?fore, the manufacturers have to disaggregate the market to meet the different types of customer needs. He pointed out that end- users are becoming quality conscious.
Indian CE industry set to grow to $25 bn by 2020: CII
The Indian construction equipment (CE) industry has the potential to grow at 19-22 per cent cumulative annual growth rate (CAGR) to reach $20-25 billion by 2020, from the current market size of $3.3 billion (2010).
The volume of equipment sales is expected to increase from over 60,000 units in 2010 to 3,30,000 units in 2020, says the 'Vision 2020: Commanding New Heights', a study on CE industry by the Confederation of Indian Industry (CII) and the Indian Earthmoving and Construction Industry Association (IECIAL).
This growth forecast is based on the structural change globally seen in the CE industry since 2006, the stagnation in the developed economies and the emergence of new markets like India and China with 23 per cent CAGR, India's increasing share, from two per cent in 2004 to six per cent in 2010, growing urbanisation, shortage of skilled manpower, India's planned investments of $1 trillion in infrastructure and the greater role for the private sector in infrastructure development.
In order to convert this big business opportunity for the CE industry, it is suggested that the financial intermediaries like banks and non-banking financial institutions, the government and industry associations should work together and create an enabling environment.
However, the major task is with the original equipment manufacturers (OEMs) themselves. They have to equip themselves on multiple fronts. They include increased investments in collaboration with the suppliers, improving the manufacturing competitiveness, introduction of new products to meet the customer requirements, and upgrading the skills of the sales force.
Some of the key imperatives for the OEMs to realise the CE industry potential, according to the study, are to incorporate customer insights into their new product offerings, build a robust spares and services business, introduce new service offerings, address the after-sales support needs of different customers and build capabilities to deliver service to the customers.
The OEMs can also think of enhancing alternative revenue streams and allied businesses, like buying back of used equipment to accelerate replacement cycles and establishing a supporting eco system for amenable customers with the channel partners and financiers.
Another important area that the OEMs must concentrate for a robust growth of the CE industry, the study says, is skill development to meet the industry's requirement of over two million skilled personnel, in addition to the current employees, for the maintenance and operation of equipment by 2020.
Leveraging the economies of scale that the domestic market offers, the Indian CE industry can also be an export hub, especially for components like tyres, cylinders and wiring harness and equipments such as backhoe loaders, excavators and road equipment.
In order to support the efforts of the CE industry in its efforts to realise its potential to support the huge infrastructure development needs of the country, the study suggests that the Union government should rationalise taxes and duties, focus on manpower development, limit import of used equipment and develop a comprehensive roadmap for the introduction of safety and emission norms.