Image: JCB
Backhoes are by far the most popular type of construction equipment sold in India and that doesn’t look likely to change anytime soon.
But there are signs that mini-excavators, already popular in more mature construction equipment markets such as Western Europe, North America, Japan and, more recently, China, are starting to gain popularity, albeit gradually.
This was one of the findings of a full report of the new market examining the construction equipment industry in India by Off-Highway Research.
Sales of mini excavators have grown for four of the past five years in India, according to data from Off-Highway Research, with increases interrupted only by a slight drop in sales in 2020 during the covid-19 pandemic.
In 2018, they rose 29% year-on-year to 1,322 units, but by 2022 that number had more than doubled to 2,736 units.
Off-Highway Research said that while the machines initially proved popular for use on plantations in the southern part of the country, the growing shortage of manual labor and the need for better productivity, combined with the confined nature of projects in urban areas and semi-urban environments, has boosted demand.
This surge in popularity shows little sign of slowing down anytime soon, with sales up 24% in the first half of 2023 compared to the same period in 2022.
Off-Highway Research predicts 15% growth to 3,150 units in 2023, although it will decline to 2,800 units in 2024, before rising 13% to 3,600 units in 2026 and 11% to 4,000 units in 2027 .
Although this is a high percentage growth, mini excavators are still a niche market in India, accounting for only about 3% of equipment sales today. In comparison, in Europe they represent more than 40% of sales.
A growing market
Off-Highway Research’s report predicted an increase in sales of construction and mining equipment in general over the five years to 2027.
It had originally forecast a 10% year-on-year rise in equipment sales in 2023, but has since revised that up slightly to 11% and a total of 92,350 units, as a result of higher-than-expected demand for some equipment, such as mobile cranes.
It then expects an 8% year-on-year drop in sales to 84,900 units in 2024, largely because general elections are expected in the country. India’s general election could prove disruptive for the construction market, with a moratorium on the awarding of public works contracts once elections are announced to prevent incumbents from trying to influence voters.
After the general election process, Off-Highway Research has forecast steady year-on-year growth in 2025, 2026 and 2027, by which time it expects sales of construction equipment to have reached 103,700 units.
Overall, it forecast sales of construction equipment in India to grow by 25% between 2022 and 2027, with the caveat that global inflation and political turmoil hamper the exercise.
Off-Highway Research CEO Chris Sleight said: “India is a developing country and is the fifth largest economy in the world.
“Investing in high-quality infrastructure is crucial to accelerating economic growth and sustaining it over the long term.
“The government focuses on reforms in areas of physical, digital and regulatory infrastructure. Its initiatives, which include National Infrastructure Pipeline (NIP), National Monetization Pipeline (NMP) and Public Private Partnership (PPP) are designed to increase private sector participation in the creation and development of new and existing infrastructure.”
The NIP alone has projected total infrastructure investment of 111 trillion rupees (US$1.5 trillion) over the period 2019-2024.
Backhoes continue to predominate
While sales in certain machine classes such as mini excavators are starting to pick up, they are doing so from a low base compared to India’s number one machine type, the backhoe.
Sales peaked at 45,552 units in 2018 and remained strong even in the year of the pandemic when 38,030 were sold.
Off-Highway Research reported a 25% increase in sales in the first half of 2023 compared to the same period in 2022. And it maintained its previous forecast for sales to grow 7% to 38,000 units in 2023, before declining by 5% to 36,000 in 2024 and then increasing again in 2025 and 2026, when sales will reach the 40,000 unit mark and hold that level in 2027.
“Demand for backhoes will continue to be strong and will continue to dominate the Indian construction equipment market for the foreseeable future,” Sleight said.
“However, maintaining high sales volumes is a challenge due to declining machine profitability with increasing machine price and inflation without a corresponding increase in rental rates due to intense competition”.
To read the full report, click here to access it Off-Highway Research website for more details.
