The CE sector is anticipated to increase by 15-20% annually in FY2024 thanks to the ongoing and upcoming project pipeline, before seeing a steep decline to flat growth or perhaps -10% in FY2025 after the general elections.

According to Dimitrov Krishnan, MD of Volvo Construction Equipment (India) and current president of the Indian Construction Equipment Manufacturers' Association (ICEMA), which represents over 90 companies, there has been a high demand for related CE equipment ever since the road construction activity began to pick up speed in November or December 2022.

In FY2023, he anticipates that the daily average speed of road development will exceed 30 kilometres. The sector was moving an average of 40km per day in February, when road construction was at its peak. Although the government has not yet provided official information on road construction for the most recent fiscal year, ICEMA is anticipated to publish data on industry growth later this month.

Following a particularly poor performance in the first half of FY2023, the rate of road building work and resulting YoY growth have clearly improved market sentiment. And while smaller than the 32km/day in FY2021, the average daily length of new roads in FY2023 of 30 km is a significant improvement over the 19 km/day in FY2022. For the industry, the increase in road development has been a welcome relief, said Dimitrov.

Heavy-duty truck demand is rising as a result of the continuous boom in new construction in the commercial and residential real estate sectors, which also continues to be a key driver of growth in the CE sector. The mining sector's offtake of vehicles is also increasing.

Yet, Dimitrov remains concerned about the sector's short-term prospects. He claims that the growth cycle of the CE industry is likely to slow down in FY2025 because India will hold national elections in the middle of 2024. The fiscal year that follows elections usually sees a dip in this area, and since the CE industry did so well in FY2023 and is projected to do so again in FY2024, it may only have flat growth or even experience a 10% decline.