Page 22 - Contractors World - International Vol 3 No 7

Page 22
Contractors World - InternationaVol 3 No 7
Government doubles infrastructure
spending in new five year plan
The construction sector in India is likely to continue its growth above the average GDP. In an interview with the
organizer of bC India, bC Expo India, Shushmul Maheshwari, spokesperson of the Research Company RNCOS, and Anna
Westenberger, spokesperson of Germany Trade and Invest (GTAI), outlined the current situation of the Indian market.
Asked what is the most unique feature about the Indian construction industry, Shushmul Maheshwari replied “ The
Indian construction industry is highly fragmented. This is partially due to the fact that, for most projects, there are no
long-term relationships between the contractors and clients and partially due to the fact that the sector in many cases
lacks economies of scale. Thus, smaller players may have better cost structures due to lower overhead costs.
Furthermore, one has to differentiate between the organized and the unorganized segment of the sector. The
organized segment consists of firms and independent contractors who manage their business on a more professional
basis and operate on small and medium as well as large scales. The unorganized segment primarily consists of stand-
alone contractors that operate at a small scale.”
In regards to the demand for construction equipment Mr Mahershwari said “India, as the world’s seventh largest
country by area and second biggest by population, is one of the most dynamically growing, but largely untapped
construction equipment markets.
In the recent years, the country has witnessed massive investment in the construction industry from both public
and private enterprises. Multi-billion dollar investments in constructing roads, ports and power plants, and developing
telecommunication sector and urban infrastructure have paved the way for the construction equipment demand to grow
phenomenally. Industry experts predict the market growing even faster for the coming years. From 2010 to 2020 it is
estimated to grow six times to a size of 20 to 25 billion US dollars.”
Slowdown in economic growth
When asked about the possibility of slow down in economic growth he said “According to our research report,
Booming Construction Equipment Market in India’, the Indian construction equipment industry has been witnessing a
consistent double-digit growth over the past few years. Though the economic slowdown had its moderate effects on
the industry, it regained momentum in 2010 showing a stupendous growth which is expected to continue in the years to
Anna Westenberger, following on from this said, “The construction equipment market did indeed grow slower;
nonetheless we are still talking about five per cent annual growth. The reason for this decline lies in growing uncertainties
regarding the market and its regulations as well as rising capital costs. In the medium term we are still not worried.
Especially the demand for low-budget housing will very likely not decline, especially if one takes into account the rapid
growth of India‘s metropolises.”
The earth-moving segment, in particular, has been driving the overall construction equipment industry in India, with
the strong demand emanating from the government-backed infrastructure projects. The segment is poised to register a
remarkable compound annual growth rate of around twenty-one per cent during 2011 to 2015, as per our estimates”,
said Mr Mahershwari.
Photo: Srikanth Ramakrishnan