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Material Handling Equipment is equipment used for the movement, storage and protection of goods in all industries for manufacturing and distribution.

Material Handling Equipment comes in all kinds of different forms. From the humble sack truck to motorized solutions heavy-duty lifting platforms, there's a piece of equipment for just about every conceivable set of moving/handling requirements.

• Material handling equipment gets the job done more quickly.

• It also reduces the risk of injury!

• Material handling equipment may be less expensive -it pays for itself.

The Indian market for materials handling equipment (MHE), accounting for about 13 percent market share of the country's construction equipment industry, has witnessed significant growth in the recent past. This growth is primarily being driven by increasing investment in infrastructure development, growing penetration of advanced technologies, rising demand for increased automation, and safe working practices in the manufacturing space. 

The market is expected to grow at a compound annualized growth rate (CAGR) of 10 percent from 2016 through 2020.

The different types of handling equipment can be classified into four major categories: 

• storage, 

• engineered systems, 

• industrial trucks, 

• and bulk materials handling. 

Cranes and forklifts dominate the Indian MHE industry. While pick-and-carry cranes are the largest segment with 27 percent market share, forklifts have 12 percent share. Slew cranes, crawler cranes and tower cranes together account for 24 percent, while the remaining 37 percent is filled in by other materials handling equipment.

Currently, there are around 50 units in the organized sector for manufacturing MHE in India, and several units exist in the small-scale sector as well. Some of the major domestic players operating in the MHE market space are Action Construction Equipment, BEML, Bevcon Wayors, Demag Cranes & Components (India), Elecon Engineering Company, Escorts Construction Equipment, Godrej & Boyce Manufacturing Company, JCB India, ElectroMech Material Handling Systems (India), McNally Bharat Engineering Company, Saico Group, Tata Hitachi Construction Machinery Company, ThyssenKrupp Industries India, Tractors India, and Voltas Material Handling. Many of these companies have, while launching new products in the MHE segments, have also expanded manufacturing capacities, and formed strategic alliances in the hope of a strong business environment in the future.

As MHE is primarily used for movement and storage of goods within a facility or at a site, the need for such equipment is directly related to freight traffic volume. With the government of India's renewed focus on incentives the manufacturing sector, the logistics market is likely to reap the benefits in the coming years. Manufacturing will remain one of the biggest demand drivers of the warehousing sector. Estimates predict that investment in warehousing can produce returns in the range of 12 to 20 percent annually.

The government of India has delicensed the MHE industry and allowed 100 percent foreign direct investment (FDI) under the automatic route. Further, given the Make In India initiative and the government's focus on ease of doing business, this industry presents several opportunities.The Increasing demand for customized solutions brings in the opportunity to develop after-sales services like onsite training and assistance. There is also an increased emphasis on environmentally friendly and green machines, ergonomics and aesthetic designs. Global players can also explore opportunities in the equipment rental and leasing business in India.

However, the Indian MHE market is still in its nascent stage, and has a long way to go in terms of knowledge, use, and the importance of such equipment. One of the biggest challenges facing the industry is related to the host of taxes and duties levied across India's various states. However, the recent introduction of a goods and services tax is likely to be a game-changer for this industry, as it will enable customers to consolidate and build warehouses and distribution centers where it makes economic sense, rather than having them sub-optimally spread across various states. Other challenges include a lack of standards for palletization, and unsafe lifting and handling practices (mostly prevalent in small-scale industries or the unorganized sector). There is intense competition among the major players, as the Indian market is price-sensitive, and low switching costs from buyers increase competition.

The industry is poised for rapid growth in the coming years, with major investment plans in infrastructure and construction. Demand will be driven by an increase in investment in industries across India by both domestic and international companies.

The major driver for the growth of the Material Handling Equipment Market is the increasing automation across manufacturing industries. The constantly increasing pressure for optimization of resources and raw materials consumption, is driving the use of Material Handling Equipment Market. The other factors driving the growth of the Material Handling Equipment Market are constant innovation in technology, up gradation of the manufacturing plants and the expansion of the manufacturing base in developing nations.

The world market for Material Handling Equipment and systems is projected to increase more than 5 per cent per year and exceed $120 billion (including price increases)

A recent study reveals that the Indian MHE industry is expected to grow steadily. The improvement in the Indian economy will result in accelerated demand for goods movement and create opportunities for suppliers of goods handling products and services of all types.

With the “Make in India” plan taking root, the industry is expecting to see good growth in manufacturing and consequently in logistics and distribution activities for the next few years.

India is emerging as a key market for material handling equipment with a spurt in the number of warehouses and container freight stations.This will, in turn, boost the demand for MHE like forklifts, pallet trucks, stackers, order pickers and reach trucks.

The need for MHE is directly related to the amount of cargo and freight traffic. India will see a major pull in the demand for these equipments. With a wide production capacity base, India is perhaps the only developing country, which is totally self-reliant in such highly sophisticated equipment.

Total warehousing space requirement in India expected to grow at a CAGR of 9% from 919 mn sq. ft. in 2014 to 1,439 mn sq. ft. by 2019.

• Manufacturing will continue to remain one of the biggest demand drivers of the warehousing sector with an annual requirement of 61 mn sq. ft. of incremental space between 2014 and 2019

• With the government's renewed focus on incentives the manufacturing sector, the logistics market will reap the benefits in the coming years

• Investment in warehouse can provide an opportunity of realizing returns in the range of 12%-20% per annum to investors willing to explore this sector

Logistic Industry – Market Trends

Logistics spend in India is 13% of GDP whereas globally it is in range of 9% to 10%.

• As India's nominal GDP could grow from $1.8 trillion currently to $3.6 trillion by 2020, the overall export-import cargo at Indian ports is projected to increase to around 2,800 million metric tonnes (MMT) by 2020 from approximately 890 MMT now.

• India logistic industry accounts for 2% (100 billion US$) of 5000 billion US$ global logistics industry and expected to grow at 15% to 20% per annum reaching revenue of 280 billion US$ by 2016 according to Cushman & Wakefield.

• India has the capacity of only 30 million tonnes of cold storage and it requires another 62 million tonnes.According to a report .

• Every retailer relies on strong logistics & warehousing infrastructure for success of his business. Robust growth in foreign trade, (Imports and Exports) demands availability of quality and timely logistics and warehousing services.

• The current economic loss due to poor logistics infrastructure is $45 billion, which is 4.3 percent of the GDP and is expected to increase to $140 bn — over 5 percent of the GDP by 2020.

• The contribution of ports situated in TN and West Bengal is set to increase significantly.

Overall, India is expecting a CAGR of 10 per cent in the period 2016 to 2020 in the material handling sector.Customers typically look at solutions to their material handling needs to transfer materials (mostly in pallets) from Point A to Point B. As the goods are mostly palletised, this leads to high productivity and reduces overall costs in the system.

One of the biggest challenges faced by the material handling industry is related to the plethora of taxes and duties across various states in India. Introduction of GST will be a game changer for this industry as it will enable the customers to consolidate and build warehouses and distribution centres where it makes economic sense rather than having them sub-optionally spread across various states.

Other challenges faced by MHE manufacturers in India are the sharp practices followed by some global players who avoid payment of taxes in India by utilising methods such as high sea sale, etc. This method enables the seller to sell the equipment in India in INR without paying VAT. At the same time, Indian manufacturers have to bear incidence of VAT on their sales, thus putting Indian manufacturers at a disadvantage vis-à-vis such imports. State Governments have to be vigilant to stop these kind of practices and only allow genuine cases to happen.

There is also discrimination by various states for manufacturing in India with the application of Entry Tax on goods manufactured in India. This Entry Tax is not applicable on products imported. All the above taxes on Indian manufacturers flies in the face of the Prime Minister's ambitious “Make in India” initiative and needs to be addressed expeditiously