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Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling India's overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads and urban infrastructure development. In 2018, India ranked 44th out of 167 countries in World Bank's Logistics Performance Index (LPI) 2018.

India has a requirement of investment worth Rs 50 trillion (US$ 777.73 billion) in infrastructure by 2022 to have sustainable development in the country. India is witnessing significant interest from international investors in the infrastructure space. Some key investments in the sector are listed below.

In 2018, infrastructure sector in India witnessed private equity and venture capital investments worth US$ 1.97 billion. In June 2018, the Asian Infrastructure Investment Bank (AIIB) has announced US$ 200 million investment into the National Investment & Infrastructure Fund (NIIF). Indian infrastructure sector witnessed 91 M&A deals worth US$ 5.4 billion in 2017.

Foreign Direct Investment (FDI) received in Construction Development sector (townships, housing, built up infrastructure and construction development projects) from April 2000 to March 2019 stood at US$ 25.05 billion, according to the Department of Industrial Policy and Promotion (DIPP). In Union budget 2019-20 under Pradhan Mantri Awas Yojana (PMAY) Urban over 8.1 million houses with an investment of about Rs 483,000 crore (US$ 69.10 bullion) has been sanctioned, out of which construction started of around 4.7 million houses Over 2.6 million houses completed of which nearly 2.4 million houses delivered to the beneficiaries. During Jan-Dec 2018, infrastructure sector witnessed PE/VC twelve deals worth US$ 500 million and eight US$ 1 billion plus deals. Brookfield's US$ 1.9 billion acquisition of Pipeline Infrastructure India in first quarter of 2019 was largest PE investment in the sector.

According to the data from MoSPI Flash Report-January 2018, of the total 1,304 projects, 16 projects were ahead of schedule, 372 were on schedule while 354 projects were delayed. In addition, 345 projects have incurred cost overrun while 78 projects have shown cost savings. A total of 94 projects have incurred both time and cost overrun.

The Government of India is expected to invest highly in the infrastructure sector, mainly highways, renewable energy and urban transport. The Government of India is taking every possible initiative to boost the infrastructure sector. Announcements in Union Budget 2019-20:

• The Government of India has given a massive push to the infrastructure sector by allocating Rs 4.56 lakh crore (US$ 63.20 billion) for the sector.

• Communication sector allocated Rs 38,637.46 crore (US$ 5.36 billion) to development of post and telecommunications departments.

• Select airports in Tier 2 cities will be taken up for operation and maintenance in the PPP mode in the coming years. 

• The Indian Railways received allocation under Union Budget 2019-20 at Rs 66.77 billion (US$ 9.25 billion). Out of this allocation, Rs 64.587 billion (US$ 8.95 billion) is capital expenditure. Metro rail network has touched 657 Km and Ministry of Railways have been allocated Rs 94,071 crore (US$ 14.11 billion) in 2019-20.

• Rs 83,015.97 crore (US$11.51 billion) allocated towards road transport and highway.

• Rs 3,899.9 crore (US$ 540.53 billion) to increase capacity of Green Energy Corridor Project along with wind and solar power projects.

• Allocation of Rs 8,350.00 crore (US$ 1.16 billion) to boost telecom infrastructure.

• 30 000 kms of PMGSY roads have been built using Green Technology, Waste Plastic and Cold Mix Technology.

• Allocation of Rs 888.00 crore (US$ 110.88 million) for the upgradation of state government medical colleges (PG seats) at the district hospitals and Rs 1,361.00 crore (US$ 188.63 million) for government medical colleges (UG seats) and government health institutions.

• Road Bharatmala phase 2 going to be launched to develop the state road networks.

Highway construction in India increased at 23 per cent CAGR between FY 14-18 In FY18, 9,829 km of highways were constructed with an expenditure of Rs 1.16 trillion (US$ 18.05 billion).

Road building in India has become the second cheapest in Asia

In Union Budget 2019-20, Rs 83,015.97 crore (US$ 11.51 billion) was allocated for National Highways Authority of India (while Rs 19,000 crore (US$ 2.63 billion) was allocated to Pradhan Mantri Gram Sadak Yojana (PMGSY) for development of roads in rural and backward areas of the country.All villages in India will be connected through a road network by 2019 under PMGSY. 30,000 kms of PMGSY roads have been built till Fy2019.

A target of constructing 10,000 km long National Highways during 2018-19 was set up out of which 6,715 km have been constructed, as of December 2018. As of July 2019, 657 kilometres of Metro Rail network has become operational across the country. National Highway Programme to be restructured to ensure a National Highway Grid, using a financeable model National highway construction sets a record of 31.87 km per day in December 2018.

The Indian Railways received allocation under Union Budget 2019-20 at Rs 66.77 billion (US$ 9.25 billion). Out of this allocation, Rs 64.587 billion (US$ 8.95 billion) is capital expenditure.

The Ministry of Railways is working on a plan to earn Rs 15,000 crore (US$ 1.56 billion) over the next 10-20 years through a rail display network (RDN) enabling real time information to passengers.

Indian Railways will require investment of Rs 35.3 trillion (US$ 545.26 billion) by 2032 for capacity addition and modernisation The capital expenditure in the sector is expected to be increased 92 per cent annually. All Indian Railways trains will become electric by 2022. Ministry of Railways have been allocated Rs 94,071 crore (US$ 14.11 billion) in Union budget 2019-20.

Indian Railways plans to become world's 1st 100 per cent 'Green Railways'. Under the INR 1.07 lakh crore redevelopment plan, Indian Railways plans to revamp 400 railway stations by monetizing 2,700 acres of spare railway land.

Port sector development is very crucial for the development of any economy. Ports handle around 90 per cent of EXIM Cargo by volume and 70 per cent by value. In order to meet the ever increasing trade requirements, expansion of Port Capacity has been accorded the highest priority with implementation of well-conceived infrastructure development projects like Sagarmala, project Unnati etc.

As of 31-Mar-2018, a total of 492 projects (?4.255630 lakh crore (US$62 billion)) were under various stages of implementation, development and completion.  It entails investing ?8.5 trillion (2018) to set up new mega ports, modernizing India's existing ports, developing of 14 Coastal Economic Zones (CEZs) and Coastal Employment Units, enhancing port connectivity via road, rail, multi-modal logistics parks, pipelines & waterways and promoting coastal community development, with the aim of boosting merchandise exports by US$110 billion and generating around 10,000,000 direct and indirect jobs. 

Under Project Unnati, the global benchmarks were adopted to improve the efficiency and productivity KPIs for 12 major ports. Around 116 initiatives were identified across 12 major ports to unlock more than 100 MTPA capacity just through efficiency improvement. Out of which, 86 initiatives have been implemented to unlock around 80 MTPA capacity.  

The Airports Authority of India aims to bring around 250 airports under operation across the country by 2020. The AAI has developed and upgraded over 23 metro airports in the last 5 years. AAI plans to develop city side infrastructure at 13 regional airports across India, with help from private players for building of hotels, car parks and other facilities, and thereby boost its non-aeronautical revenues.

The AAI plans to spend over Rs 21,000 crore (US$ 3.2 billion) between 2018-22 to build new terminal and expand capacity of existing ones. About 22 airports to get connected under regional connectivity scheme of AAI. Over 30 airport development projects are under progress across various regions in Northeast India. AAI plans to develop over 20 airports in tier II and III cities in next 5 years. 56 new airports are expected to become functional in the country over the next few years (as of April 2018).

India's scheduled domestic air transportation for passengers and goods has grown by 14 per cent and 12 per cent respectively in 2018-19. Total domestic and international passengers were 204 million in 2018-19. 

Government has decided to lease out six brownfield airports of Airports Authority of India (AAI) in Public-Private Partnership on Operation, Maintenance and Development model (Guwahati, Lucknow, Jaipur, Ahmedabad, Mangalore and Thiruvananthapuram), which is expected to enhance service quality at these airports besides bringing enhanced revenue to AAI.

UDAN: Under “Ude Desh ka Aam Naagrik-UDAN”, a total of 719 routes have been awarded in three rounds of bidding for regional connectivity, 182 of which are operational.

The demand for Indian CE grew by 24% in FY 2017-18, and the sector crossed 90,000 units for the first time. Demand for Indian CE continued to grow mainly due to the increase in infrastructure spends. The industry grew despite the hiccups of emission and GST during April and July 2017, respectively. Demonetization also had a negligible effect on the industry growth. By FY20, construction equipment industry's revenue is estimated to reach to US$ 5 billion.

 

In the calendar year 2018, the construction equipment industry registered a growth of about 30 per cent in unit terms, driven by strong growth in all components, particularly backhoes and excavators. However, the growth curve started shrinking in early 2019 due to contraction in road project in the run-up to the general elections. Easy availability of finance, positive market sentiments, and equipment replacement, are other factors that have helped the industry to grow at a rapid pace. 

Credit rating firm ICRA in Dec 2018 revised its outlook for the Indian construction equipment sector to negative as the sales of units dipped sharply due to sluggishness in infrastructure investments and tight liquidity environment.

 

Government, which is a major demand driver, also plays a facilitator's role through policy and regulations. It is the largest end customer accounting for nearly two thirds of the demand for Indian CE products and hence has a very significant impact on the industry. Also, its role in setting policy and regulation has a further impact on the industry. Be it GST or 'Construction, Earthmoving, Material Handling, Mining (CEMM) Act' or the RERA Act for the Real Estate sector or the sand mining policy or the 'concrete site mix usage, land acquisition guidelines', the Indian CE industry looks to the Government to act as an enabler. Its policy for facilitating export growth helps the Indian CE manufacturers reach out to existing and new markets. It monitors imports allowing for domestic manufacturing activity to flourish.

In the current infra development scenario, the Roads & Highways sector will remain the main growth driver for the CE industry, followed by Railways & Metros, Irrigation, and Ports. Highway construction (Roads) has been one of the key drivers for equipment growth. Big-ticket projects like Smart Cities, Bharatmala, Sagarmala Programme for modernisation of ports, increasing connectivity and port linked industrial hubs, Airport development and upgradation, Jal Marg Vikas, AMRUT, Housing for All, and Diamond Quadrilateral for high-speed railways, river linkages and bullet trains are set to drive demand for equipment.

Some of the major players operating in India construction equipment market are JCB India Limited, Action Construction Equipment Limited, BEML Limited, L&T Construction Equipment Limited, Greaves Cotton Limited, McNally Sayaji Engineering Company Limited, Kobelco Construction Equipment India Pvt. Ltd, Apollo Infratech Pvt. Ltd, Putzmeister Concrete Machines Pvt. Ltd, and Mahindra Construction Co. Ltd., among others.

New German technologies for reducing CO2 are ready. Greenhouse gases, including carbon monoxides, nitrogen oxides, methane gas and fluorinated hydrocarbon compounds, are responsible for global warming. It is an undisputed fact that CO2 contributes to the greenhouse effect. The substance is generated when fossil fuels such as coal, crude oil and natural gas are combusted, primarily through the production of electricity and heat, in households, traffic and industrial production. Construction machinery also contributes in part, while building material plants can have a major impact too. With the Paris Agreement, 195 countries have set a clear objective for the first time: By the year 2050, the output of greenhouse gases must be reduced drastically in order for global warming to remain clearly below 2° Celsius by the end of the century. 

Almost all ideal Manufacturers of construction machinery have been working tirelessly for the past few decades to bring their machines up to date and reduce the emissions. On the one hand, European legislation has dictated the gradual reduction of exhaust emissions since 1996 – although this only marginally affects carbon dioxide – while on the other, the cost pressures of fuels have resulted in them reducing the consumption of their machines, and in turn, their CO2 emissions. 

Construction machines have a far more complex engineering architecture than a normal car or truck. There are countless types of machines which are deployed in a wide ranging sector comprising numerous different application areas. An approach of significantly reducing CO2 emissions can therefore only be implemented holistically and must include the entire operational process, starting with the equipment, its efficiency, the operation of this equipment and alternative fuel sources.

Increasing digitalization is helping to optimize these processes and make them leaner, another factor which also saves fuel. It is therefore not a viable approach to upgrade old machines (i.e. retrofit) – users should instead invest in modern and cutting edge construction machinery which meets the increased demands and are optimally designed for the entire operational process. 

The boom in the German construction equipment sector is continuing, as more and more regions around the world are experiencing growth. In 2018, out of the total imports of India of Construction Equipment of € 1.6 billion, Germany stood 2nd with a share of 25.2% after China (33.9%) and ahead of Korea Korea (18.1%). This trend is expected to continue for 2020, and is consistent with very strong business sentiment in surveys amongst equipment manufacturers.

In a fast moving world to maintain growth momentum, India has to develop its industry and infrastructure. As an emerging economy, Next generation infrastructure are enormous bringing  physical infrastructure and technology like internet of things, automation together to maximize. the efficiency of physical infrastructure. For a smooth and fast travelling, India needs adequate and timely investment in quality infrastructure.

In order to create a ten trillion dollar economy by 2032, India needs a robust and resilient infrastructure. Public investment cannot fund thea entire infrastructure investment requirements of the country. Further, private players are usually eager to bring their capital into developed Indian states as compared to less developed states. Therefore, the real challenge lies in bringing adequate private investment across the country with the collaboration of public sector. Along with physical infrastructure; provision of social infrastructure is also equally important as these two would determine where India will be placed in the world by 2030.

Many German companies have set up and are setting up manufacturing in India in addition to the sale and service office. Several German companies and VDMA members are planning towards more investments in India. German construction equipment and building material machinery manufacturers like Liebherr, Schwing Stetter, Putzmeister, Wirtgen, ZF, Beumer and Thyssenkrupp to name a few have invested substantially in the last 5 years. A lot of our member companies have established centers for product development and R&D also to serve the global requirements through the Indian workforce.