Construction equipment industry eyes $23 billion revenues

November 22nd, 2011 - 6:55 pm ICT by IANS  

Bangalore, Nov 22 (IANS) The fledgling Indian earthmoving and construction equipment (ECE) industry has the potential to grow its revenues six times to $23 billion by 2020 if the targeted investment of $1 trillion is made in the infrastructure sector during the 12th Plan period (2012-17) and beyond, a top industrialist said Tuesday.

“As a derivative industry, we have the potential to grow six fold to $22.7 billion in 2020 from $3.3 billion in 2010 if $1 trillion is invested in the infrastructure sector during the 12th Plan as envisaged and if projects of national importance are cleared without delays,” JCB India Ltd chief executive Vipin Sondhi told reporters here.

Hinting that current high interest rates and rising commodity (metals) and crude prices would halve the industry’s revenue growth rate to 15 percent in 2011 from a record 30 percent posted in 2010, Sondhi said the global meltdown in 2008-09 had impacted the growth rate resulting in revenues increasing to $3.3 billion from $1.7 billion over a five-year period since 2006.

“The growth pace of our industry is solely dependent on infrastructure spend, which currently accounts for a mere 5-6 percent of the GDP (gross domestic product). If the infrastructure spend doubles, our revenues have potential to grow vertically, instead of growing linear as in the past,” said Sondi, who is also chairman of the industry’s trade fair Excon 2011.

Admitting that problems of land acquisition, dispute resolutions, lack of transparency in public-private partnership (PPP) projects, complex tax regime and high cost of capital due to higher interest rates were coming in the way of accelerating the growth, Sondhi said that the government and other stakeholders had to find lasting solutions to create an enabling environment for the industry to realise the huge potential.

“The government and other stakeholders will have to remove the bottlenecks to speed up the infrastructure sector growth, which will have a force multiplier effect on other sectors of the economy and enable the GDP to grow at 9-10 percent annually,” Sondhi said ahead of the sixth international construction equipment and construction technology trade fair (Excon) from Wednesday at the Bangalore International Exhibition Centre (BIEC) on the city’s outskirts.

Noting that there was an urgent need to step up the pace of infrastructure development, Sondhi said the ECE industry would have a vital role to play in the development of roads, highways, ports, airports, power and employment generation.

“The opportunities are plenty for the industry,” he added.

Organised by the Confederation of Indian Industry (CII), the biennial six-day event will showcase construction equipment and unveil 400 new products with 630 exhibitors, including 200 foreign firms.

Union Minister for Road Transport and Highways C.P. Joshi will flag-off the event.

Touted to be South Asia’s largest ECE trade event, the exposition will have a large number of small and medium enterprises (SMEs) in the component and aggregate manufacturing, showcasing the country’s potential as a preferred outsourcing destination for construction equipment manufacturing.

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