Infra push along border keeps construction equipment companies busy

The standoff along the border with China this year has had an unexpected spin-off for India’s construction equipment industry.

With increased government emphasis on infrastructure development in border areas after the escalation in tension with the country’s largest neighbour, sales of construction equipment to the Border Roads Organisation (BRO) has increased 50% in the first half of the ongoing fiscal year.

Overall sales of construction equipment in the local market declined 35% in the six months ended September 30. Sales had fallen as much as 60% in the first quarter, before recording a smart recovery in the following three months, boosted by government spending on infrastructure projects.

Indian Construction Equipment Manufacturers’ Association president Sandeep Singh confirmed there had been an increase in government spending on the purchase of construction equipment for infrastructure development in border areas.

“There has certainly been an increase in road construction in border states the past few months, leading to a rise in demand for construction equipment,” said Singh.

Singh — who is also the managing director at construction machinery manufacturer Tata Hitachi — said his firm had supplied 94 excavators to the BRO. While the order was originally placed last year, Tata Hitachi worked through the lockdown to deliver the equipment ahead of deadline due to the increased infrastructure development activities along the border.

India has redoubled efforts, after the latest tensions, to develop key infrastructure — roads, tunnels, bridges and airfields — along the unsettled 3,500 km border with China. The Centre had identified 73 “strategic roads” (totalling 3,812 km) along the China border, 28 of which were made operational, 33 are under construction and the work on remaining is in initial stages. The BRO has been entrusted with 61 of these roads totalling 3,417.50 km.

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Defence minister Rajnath Singh had told Parliament in September that the government has doubled the budget for infrastructure development along the border with China.

JCB India deputy chief executive Deepak Shetty said: “We work very closely with the BRO. Even during the lockdown, through our digital platform, we were able to connect with and support our customers working in remotest parts of the country … While we cannot share details on the exact quantum, orders this year have been multipronged for backhoe loaders, excavator and wheeled loaders … This gives an indication that large projects are underway.”

Overall, Shetty said, the government’s renewed push on infrastructure development had made the company cautiously optimistic. “While we saw green shoots last quarter, we still need to be cautious because of the pandemic. However, the measures that the government has taken to increase investments in infrastructure projects should help sustain the momentum and return the industry on the growth path next fiscal year.”

Last quarter’s recovery in sales was the first in four quarters. Even as total sales volumes are set to decline by 8-10% to 65,000-70,000 units in the ongoing fiscal year, because of the impact in the first quarter, the growth momentum from the second quarter is expected to continue. In 2021-22, the industry expects to regain the peak sales of 95,000 units, registered in FY19.



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