Export a new opportunity for construction equipment industry

(This story originally appeared in on Feb 25, 2021)

CHENNAI: The $6.5 billion construction equipment industry in India sees an export as the new BS4 emission standards have opened up opportunities to tap developed markets like North America, Europe and UK.

Said Sandeep Singh, MD Tata Hitachi and president of Indian Construction Equipment Manufacturers Association (ICEMA): “So far we were selling Tier 2-3 machines in India but with BS4 which is equivalent to BS6 of the auto industry, a number of developed markets will open up for us. We can now look beyond the Middle East and Africa to Europe, North America and the UK in terms of export opportunities.”

Indian companies — both local and MNC — have so far been exporting 12-13% of their produce but that is now set to change. Export of CE machines and components hit a high of Rs 5300 crore in FY18-19 but fell sharply to Rs 3583 crore in FY19-20 on global cues shows data from ICEMA. Now CE companies are planning to ramp up export of both machines and parts even as domestic demand picks up.

Take JCB. According to deputy MD Deepak Shetty, the company is constructing a Rs 700 crore factory in Vadodara focussed on export including components to UK, US and Brazil. “We already export machines to 110 countries and have exported 60,000 fabricated components from our Pune facility,” he said. “We will also start exporting engines and transmissions to UK, US and Brazil.” Alongwith Europe, India is the largest market for JCB.

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Others like Schwing Stetter are also planning to tap into the export pick up. Said V G Sakthikumar, MD, Schwing Stetter India: “After 2012 exports fell sharply due to global cues but now we are exporting to North and South America, West and East Europe, Asean and Africa.” The company which is setting up its new Rs 300 crore factory in Cheyyar in Tamil Nadu is also putting in place an R&D centre there to focus more on exports. “There are some global changes happening which is aiding exports from India,” said Sakthikumar. “Earlier Turkey used to dominate the Gulf but now India controls that market.”

The Indian CE market has been hobbled by the fact that the bigger machines are imported from China, Korea and Japan. And many of the lighter machines popular in India like backhoe loaders do not sell anywhere else, said Singh.

But with focus on developed markets and the shift in emission standards that will change he added.

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