Construction equipment (CE) sales rose 18 per cent y-o-y to 27,244 units during Q1 FY24 aided by the government’s thrust on infrastructure spending.
Another reason for higher sales of earthmoving, road and material handling equipment is due to the government’s plan to complete projects on time ahead of the crucial Lok Sabha elections scheduled in 2024.
Besides, the government’s aim to spend the bulk of the funds in the current calendar year will further boost sales in Q2 and Q3 FY24.
The total equipment numbers sold increased to 27,244 (against 23,037 in Q1 FY23), of which 24,806 were sold domestically while 2,438 were exported, Indian Construction Equipment Manufacturers Association (ICEMA) said.
“The excellent sales growth in the first quarter of the current fiscal year is a result of the accelerated pace of infrastructure projects. Infrastructure projects worth ₹40,600 crore are already in the pipeline, and new projects are expected to be floated at a rapid pace in the near future, which is very welcome news for the CE industry,” ICEMA President Dimitrov Krishnan said.
The growth in sales during Q1 FY24 comes on the back of positive growth in three of the CE industry’s major equipment segments. Earthmoving equipment sales grew 19 per cent y-o-y, Road Construction equipment by 38 per cent y-o-y and Material Handling equipment by 57 per cent on an annual basis.
The other two major equipment segments – Material Processing E]equipment and Concrete equipment – registered a drop in sales, of 10 per cent and 11 per cent, respectively.
Earthmoving Equipment, which accounts for around 70 per cent to total CE sales, sold 18,831 units in Q1 FY24, of which the bulk comprised of increased sales of backhoe loaders (10,161 units) and crawler excavators (6.866 units). The substantive growth of 57 per cent in sales of Material Handling equipment comes on the back of a spurt in sales of 2,966 pick and carry cranes.
Infra boost
Convenor of ICEMA’s Industry Analysis and Insights Panel, VG Sakthikumar pointed out that the 17 per cent increase in budgetary allocation to the infrastructure sector and 15 per cent increase in the budgetary allocation to NHAI are already showing results in the form of pickup in the pace of infra projects.
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“The industry expects the next two quarters to see a boost in demand on the back of the directive of the government to spend 80 per cent of the budget allocation for the infrastructure sector by December 2023,” he added.
Sakthikumar explained that the second highest allocation to road infrastructure, amounting to 20 per cent of the total allocated budgetary expenditure, is very encouraging for the CE industry, as road construction accounts for around 40 per cent of the total demand for construction equipment in the country.
Elections
“The current fiscal being an election year, the projects in the pipeline, as well as those that start shortly, are expected to be completed well in time,” Krishnan said.
ICEMA urged the government to ensure that the steady pace of execution of projects is maintained, to ensure the continued robust growth of the CE industry at the expected rate of around 15 per cent for the current fiscal year, he added.