ICEMA Summit: Making CE Manufacturing Future-Ready
The 2nd CE Manufacturing and Supply Chain Summit, organized by the Indian Construction Equipment Manufacturers Association (ICEMA) – an affiliated body of CII, in New Delhi, on 19th February 2024, hosted discussions on critical topics pertaining to the future of CE manufacturing, namely, Technology and People-led Transformation; Modern, Agile and Sustainable Equipment; and a Strong and Resilient Supply Chain as the Mantra for Going From Local to Global.
The theme "Towards Making CE Manufacturing Future-Ready," highlighted the importance of adopting advanced technologies holistically, in the context of making the CE supply chain resilient and robust, and facilitating its emergence as a global CE manufacturing hub.
“The impact of the Construction Equipment industry in infrastructure development in the country, is much more than what the industry numbers show,” said Vinod Sharma, Member Executive Committee – ELCINA (Electronic Industries Association of India) and Managing Director – Deki Electronics Ltd. He elaborated upon the evolving Electronics sector, learnings for the CE industry, and scope for synergies between the two sectors, as Construction Equipment manufacturing moves into a tech-enabled, automated growth path.
V. Vivekanand, President ICEMA and Managing Director, Caterpillar India, said, “A vibrant CE manufacturing sector is not only about building capacity but also capability, as we need to become globally competitive and emerge as truly resilient. For this, we need to embrace technology more holistically." He referred to the CE Technology Vision Roadmap 2035, published by ICEMA, that explains how the technologies in the Construction Equipment industry will change from now until 2035.
The CE Vision Plan 2030, which targets a 14% CAGR to triple the industry’s market size from its current USD 8.5 billion to 25 billion, and its global ranking from third to second by the end of the decade, hinges critically upon the ability of CE manufacturing to meet future demand in terms of both quantities and the evolving requirements for new-age machines with advanced technologies, along with a strong component of environmental responsibility.
“There is a strong imperative for strengthening MSMEs as well as for attracting FDIs into the industry to boost domestic manufacture, especially of high precision, high value components for which we are heavily import dependent currently. ICEMA has submitted a PLI proposal for the CE industry to the Government, which is now at an advanced stage of consideration," informed V. G. Sakthikumar, Convener, ICEMA Manufacturing & Supply Chain Panel, Treasurer ICEMA and CMD, Schwing Stetter India during his welcome address at the Summit. "As the industry undergoes a transformation to become future-ready, these initiatives will enable creation of a supportive ecosystem and a robust supply chain to propel the manufacturing sector on a high growth path,” he said.
The Summit featured a localisation zone to display CE components, and provided CE manufacturers and suppliers an opportunity to evaluate the possibilities of collaborating with industry leaders for domestic manufacture of critical components, which would strengthen the CE industry’s supply chain.
A highlight of the Summit was the Special Session featuring the release of ICEMA knowledge report, “Indian Construction Equipment Industry: Charting New Horizons’, prepared in collaboration with credit rating agency ICRA, and National Investment Promotion and Facilitation Agency, Invest India. A presentation on the report was given by Ritu Goswami, Sector Head & Assistant Vice President, Corporate Sector Ratings, ICRA Ltd. The report provides a detailed insight about the industry’s growth and performance in serving the end-user industries, the CE Industry Vision Plan, and provides suggestions for the industry to address current challenges and achieve its growth targets by 2030.
According to the report, the global construction equipment market is expected to grow at a CAGR of 6.5% with the Asia-Pacific region enhancing its share to ~48%. There is a near-term opportunity to leverage global growth across regions and accelerate India’s global value chain participation. The Indian CE industry grew at a healthy pace in the second half of the last decade, witnessing a CAGR of approximately 14% in the period FY2015-2019. The industry’s growth since FY2016 has primarily been driven by increased Government focus (and spend) on rapid infrastructure development.
In the last five years, the industry’s growth momentum was broken in FY2020 (-14% YoY) and FY2022 (-8%YoY) on account of economic slowdown followed by Covid-19 and significant hikes in equipment prices on account of changes in emission norms (to CEV-IV standards). The industry bounced back in FY2023 with a sales growth of 26% YoY and crossed the one lakh sales mark for the first time in history. Volumes are expected to grow in double digits in FY2024 as well. The growth potential remains strong, given the Government’s ambitious plans for infrastructure and mining industry.
The release of the knowledge report was followed by a presentation on the Purchasing Managers’ Index (PMI) for the Construction Equipment industry by Ranganatha Raju, Founder of Sanathana Analytics. This is the first ever PMI for the CE industry, for the month of January 2024. A monthly Purchasing Managers Index (PMI) is expected to act as a reliable barometer of the economic health of the Construction Equipment manufacturing sector, integrating various key metrics such as new orders, production levels, employment trends, and supply chain dynamics, to provide a holistic view of the industry's performance.
In the course of the panel discussions, subject experts from research institutes gave insights on the need for industry-academia connect to encourage innovation and excellence in research; and to come up with product offerings and manufacturing practices that can hold their own in terms of global quality standards. The panellists from OEMs shared information and opinions on their own experiences and expectations in technology adoption and collaboration with academia and research institutes.
With regard to producing modern, agile and sustainable equipment to align with the expectations of future consumers as well as the global imperative for achieving carbon neutrality, Vivekanand emphasised the need for interoperability of equipment for smart jobsite solutions and said that the sustainability component needs to go beyond alternate fuels, to encompass a ‘cradle to grave’ approach, i.e., environmentally responsible choices from equipment design, right up to the recycling stage.
During the panel discussion on resilient supply chain for future growth of the CE industry, Supriya Devasthali, Director – Department for Promotion of Industries & Internal Trade, Government of India, shared the initiatives and plans of the government for supporting the creation of a robust manufacturing ecosystem for Construction Equipment by supporting MSMEs, incentivising domestic production of critical components, and attracting investments into the sector.
“The Construction Equipment industry is one of the few industries with a forward-looking Vision Plan, not only for growth but also for technology adoption," said Jaswinder Singh Bakshi, Vice President- ICEMA and Senior Vice President - Tata Capital Financial Services Ltd., as he delivered the Vote of Thanks in the Opening Session of the Summit. Expressing his confidence in the ability of the Indian CE industry to become number one globally (as envisaged by the Hon'ble Minister, MoRTH, Shri Nitin Gadkari), Bakshi added, "ICEMA has also been working proactively to provide financing solutions for Construction Equipment manufacturers as part of the endeavor to catalyse a conducive environment to boost CE manufacturing and a resilient supply chain for the industry."
The Summit was well-attended by representatives of stakeholders including government body representatives, OEMs, component manufacturers, academic and research institutions, and end-users of Construction Equipment. It also generated consensus on the criticality of creating a facilitative environment to strengthen MSMEs which manufacture around 90% of CE components, accompanied by incentives such as PLI scheme, which would go a long way towards bolstering the localization efforts of the industry.
The one-day event shed light upon the skilling initiatives for the industry. Besides industry-specific programs and state-of-the-art training facilities, efforts are also underway to reorient the workforce to bridge differences of perspective across age groups as well as to induct more women for greater inclusivity. Attracting quality workforce into the sector also emerged as an urgent need to make the industry future ready.
The theme "Towards Making CE Manufacturing Future-Ready," highlighted the importance of adopting advanced technologies holistically, in the context of making the CE supply chain resilient and robust, and facilitating its emergence as a global CE manufacturing hub.
“The impact of the Construction Equipment industry in infrastructure development in the country, is much more than what the industry numbers show,” said Vinod Sharma, Member Executive Committee – ELCINA (Electronic Industries Association of India) and Managing Director – Deki Electronics Ltd. He elaborated upon the evolving Electronics sector, learnings for the CE industry, and scope for synergies between the two sectors, as Construction Equipment manufacturing moves into a tech-enabled, automated growth path.
V. Vivekanand, President ICEMA and Managing Director, Caterpillar India, said, “A vibrant CE manufacturing sector is not only about building capacity but also capability, as we need to become globally competitive and emerge as truly resilient. For this, we need to embrace technology more holistically." He referred to the CE Technology Vision Roadmap 2035, published by ICEMA, that explains how the technologies in the Construction Equipment industry will change from now until 2035.
The CE Vision Plan 2030, which targets a 14% CAGR to triple the industry’s market size from its current USD 8.5 billion to 25 billion, and its global ranking from third to second by the end of the decade, hinges critically upon the ability of CE manufacturing to meet future demand in terms of both quantities and the evolving requirements for new-age machines with advanced technologies, along with a strong component of environmental responsibility.
The Summit featured a localisation zone to display CE components, and provided CE manufacturers and suppliers an opportunity to evaluate the possibilities of collaborating with industry leaders for domestic manufacture of critical components, which would strengthen the CE industry’s supply chain.
A highlight of the Summit was the Special Session featuring the release of ICEMA knowledge report, “Indian Construction Equipment Industry: Charting New Horizons’, prepared in collaboration with credit rating agency ICRA, and National Investment Promotion and Facilitation Agency, Invest India. A presentation on the report was given by Ritu Goswami, Sector Head & Assistant Vice President, Corporate Sector Ratings, ICRA Ltd. The report provides a detailed insight about the industry’s growth and performance in serving the end-user industries, the CE Industry Vision Plan, and provides suggestions for the industry to address current challenges and achieve its growth targets by 2030.
According to the report, the global construction equipment market is expected to grow at a CAGR of 6.5% with the Asia-Pacific region enhancing its share to ~48%. There is a near-term opportunity to leverage global growth across regions and accelerate India’s global value chain participation. The Indian CE industry grew at a healthy pace in the second half of the last decade, witnessing a CAGR of approximately 14% in the period FY2015-2019. The industry’s growth since FY2016 has primarily been driven by increased Government focus (and spend) on rapid infrastructure development.
In the last five years, the industry’s growth momentum was broken in FY2020 (-14% YoY) and FY2022 (-8%YoY) on account of economic slowdown followed by Covid-19 and significant hikes in equipment prices on account of changes in emission norms (to CEV-IV standards). The industry bounced back in FY2023 with a sales growth of 26% YoY and crossed the one lakh sales mark for the first time in history. Volumes are expected to grow in double digits in FY2024 as well. The growth potential remains strong, given the Government’s ambitious plans for infrastructure and mining industry.
The release of the knowledge report was followed by a presentation on the Purchasing Managers’ Index (PMI) for the Construction Equipment industry by Ranganatha Raju, Founder of Sanathana Analytics. This is the first ever PMI for the CE industry, for the month of January 2024. A monthly Purchasing Managers Index (PMI) is expected to act as a reliable barometer of the economic health of the Construction Equipment manufacturing sector, integrating various key metrics such as new orders, production levels, employment trends, and supply chain dynamics, to provide a holistic view of the industry's performance.
In the course of the panel discussions, subject experts from research institutes gave insights on the need for industry-academia connect to encourage innovation and excellence in research; and to come up with product offerings and manufacturing practices that can hold their own in terms of global quality standards. The panellists from OEMs shared information and opinions on their own experiences and expectations in technology adoption and collaboration with academia and research institutes.
With regard to producing modern, agile and sustainable equipment to align with the expectations of future consumers as well as the global imperative for achieving carbon neutrality, Vivekanand emphasised the need for interoperability of equipment for smart jobsite solutions and said that the sustainability component needs to go beyond alternate fuels, to encompass a ‘cradle to grave’ approach, i.e., environmentally responsible choices from equipment design, right up to the recycling stage.
During the panel discussion on resilient supply chain for future growth of the CE industry, Supriya Devasthali, Director – Department for Promotion of Industries & Internal Trade, Government of India, shared the initiatives and plans of the government for supporting the creation of a robust manufacturing ecosystem for Construction Equipment by supporting MSMEs, incentivising domestic production of critical components, and attracting investments into the sector.
“The Construction Equipment industry is one of the few industries with a forward-looking Vision Plan, not only for growth but also for technology adoption," said Jaswinder Singh Bakshi, Vice President- ICEMA and Senior Vice President - Tata Capital Financial Services Ltd., as he delivered the Vote of Thanks in the Opening Session of the Summit. Expressing his confidence in the ability of the Indian CE industry to become number one globally (as envisaged by the Hon'ble Minister, MoRTH, Shri Nitin Gadkari), Bakshi added, "ICEMA has also been working proactively to provide financing solutions for Construction Equipment manufacturers as part of the endeavor to catalyse a conducive environment to boost CE manufacturing and a resilient supply chain for the industry."
The Summit was well-attended by representatives of stakeholders including government body representatives, OEMs, component manufacturers, academic and research institutions, and end-users of Construction Equipment. It also generated consensus on the criticality of creating a facilitative environment to strengthen MSMEs which manufacture around 90% of CE components, accompanied by incentives such as PLI scheme, which would go a long way towards bolstering the localization efforts of the industry.
The one-day event shed light upon the skilling initiatives for the industry. Besides industry-specific programs and state-of-the-art training facilities, efforts are also underway to reorient the workforce to bridge differences of perspective across age groups as well as to induct more women for greater inclusivity. Attracting quality workforce into the sector also emerged as an urgent need to make the industry future ready.
NBM&CW - March 2024
