Why this is important to Wisconsin businesses: Wisconsin suppliers of equipment such as cranes and forklifts will find ample opportunities as the industry continues to grow.
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 incentivizing 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 for Wisconsin companies. 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.