Private sector participation in infrastructure development in the country is expected to grow 13 per cent to 38 per cent over the next decade, says consulting major Accenture.
Accenture in its report on the Indian earthmoving and construction equipment industry released at Excon 2011 said the growth in private sector participation will increasingly look at mechanisation and usage of specialised equipment to meet project deadlines and address skilled labour shortages.
Domestic economy has remained resilient with GDP growth of 7-8 per cent. The planned investment in infrastructure to the tune of $1 trillion in the next five years and the growing urbanisation is expected to drive the construction industry at 16-17 per cent CAGR over the next decade.
Enabler
Simplification of tax regime and government incentives enables leasing of equipment to become a viable product.
Streamlining of few laws/taxes is expected to facilitate smooth movement of equipment across States enabling the emergence of large organized players.
For focus on manpower development, limit import of used equipment and develop in consultation with the industry, a comprehensive road map for introduction of safety and emission norms.
Original Equipment Makers (OEMs) need to support skill development initiatives of third parties and partner with national skill development council (NSDC) to meet the industry requirement of over 2 million skilled personnel for maintenance and operations of equipment by 2020.
Potential
The growth of construction equipment industry has the potential to growth at 19-22 per cent CAGR to reach $20-$25 billion by 2020 from the current market size of $3.3 billion.
The volume of equipment sales is expected to increase from over 60,000 units in 2010 to around 3.30 lakh units in 2020.
As the Indian market is growing, the OEMs need to focus on solution selling to enable customers in achieving their business goals. They need to upgrade the skills of the force and dealer manpower to effectively understand the customers' needs and design solutions.
Accenture in its report further said, in order to fulfil the increasing volumes and evolving customers' needs, OEMs will need to increasingly focus on multiple fronts such as new products introductions.
It is imperative for the OEMs to focus on making their dealer operations viable by enhancing alternate revenue streams of their dealers and establishing dealer development cells that will focus not only on improving the dealer performance.
Along with dealer networks, it is crucial for the OEMs to build a robust spares and service business introduce new service offerings such as full maintenance contracts, remanufactured components and reconditioned components to address the after-sales support needs.
The increasing participation of private players in infrastructure development and increasingly capital requirements, organised rentals is poised for growth.