Demand of CE to Rise as Govt Set to Invest Rs 7 Lakh Crore in National Highways

The Sentiment of Indian Construction Equipment industry has been started moving up in last few months on the back of improving investment on infrastructure projects especially road and highway development sector. The government commitment to expand and improve country’s highway network, brings cheerful news for construction equipment manufacturers who were waiting to see the revival of the CE sector for last few years.

Government has told in the Parliament that it would spend around Rs. 7 lakh crore to develop National Highways of around 50,000 km in the next 5 years, which will surely help the construction equipment companies and demand of road making equipment such as Excavators, Loaders, Dozers, Graders, Scrapers, Pavement Milling, Compactor, Cranes and other road building equipment sell are expected to rise on the back of such a huge investment for highway building.

“In last two years the Ministry of Road Transport and Highways approximately awarded projects worth Rs 2 lakh crore. Plans have been prepared to award works worth Rs 7 lakh crores in five years. For the first year the focus was on public funded projects (EPC) as the sector was under tremendous stress. Most of the projects work was stalled,” Mr. Nitin Gadkari, Minister of Road Transport & Highways and Shipping has informed the Parliament on Monday.

The Government has allocated a total Gross Budgetary Support (GBS) of Rs 46,834 crore including cess and toll remittance for 2016-17 for the Ministry of Road Transport & Highways. In addition, Internal & Extra Budgetary Resources (IEBR) of Rs 59,279 crore has also been allowed to be raised for Highways in 2016 -17. National Highway Authority of India (NHAI) has also been given permission to borrow Rs 35 thousand crore this year alone for the highway projects, in total NHAI can borrow up to Rs 75 thousand crore.

So far, 80% of the road projects awarded through public fund and rest through various forms of PPP.

Due to a huge inflow of investment in infrastructure projects in next few years, its projected that country’s construction equipment market would touch to USD 5 billion by 2019-20.

Various Market research companies like off-Highway Research, MarketsandMarkets and industry body like Indian Construction Equipment Manufacturers’ Association (ICEMA) have projected positive growth in Construction and Mining Equipment market in coming years.

The sale of CE has witnessed a jump of over 40% in first six months of 2016 against last year during the same period, which is a sign of the improvement.

Recently, NHAI has also said, the sale of construction equipment has jumped in recent times as road works accelerated, currently India is building 20 km road per day and planned to increase up to 41 km per day by next fiscal.

Source: Information has been obtained from Morth & NHAI

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