MCE Sector Likely To Grow By 2020
People working in the mining and construction equipment have a cause for celebration! According to a recent report based on historical data from 2016-2018 and the future forecast for 2019-2025, the sector is set to grow with a Compound Annual Growth Rate (CAGR) of 10%. Even though the year 2017 showed a decrease in demand for the MCE sector due to government investment plans, India is expected to be the third-largest construction market by 2022. In this blog, we analyse the reasons for the projected growth.
What Is The Mining And Construction Equipment Sector?
Construction and mining equipment includes a wide range of machinery such as hydraulic excavators, bulldozers, dump trucks, tippers, graders, asphalt drum / wet mix plants, rock breakers, vibratory compactors, backhoe loaders, auger, pallet fork, snow blower, rock wheel trencher, mulcher, cold planer, etc. These equipment perform a variety of tasks like preparation of the ground, excavation, haulage of material, road construction, etc. These equipment are used for both construction and mining. India has only a few, mainly medium and large companies in the sector who manufacture this equipment. The growth of this sector is directly proportional to the growth of the Indian economy and indirectly proportional to the growth of infrastructure. In the last few years, there has been a significant shift in the CME sector due to acquisitions, joint ventures and interests of and investments by international companies.
What Is The Reason Behind This Projected Growth?
Industrial Commercial And Residential Development:
The initiatives by the government like Smart City Mission and Housing for All is one of the major reasons for growth in this sector. The growing demand for industrialisation development and rapid urbanisation are also leading this growth. Furthermore, the population is growing at an alarming rate and there needs to be a proper infrastructure to accommodate everybody. Public-Private Partnerships
The government and private sectors are also partnering up and boosting substantial investments from the private sector into industrial development.
Global Economic growth:
Various factors have affected global economic growth and resulted in a slowdown. This has, in turn, affected the MCE sector. However, now that the economic conditions are improving in many countries and rates of unemployment are going down, the investments in infrastructure are increasing. For example, India has the need for an investment of 50 trillion in the year 2022 for sustainable development in the country. Additionally, attractive opportunities have risen like building better national highways with more than four lanes.
What Factor Is Negatively Affecting The MCE Sector?
Carbon Emissions:
With the focus on global warming and climate change increasing, the construction and mining equipment sector has received flak. All the equipment uses fuel and thus emits a lot of carbon dioxide. Carbon dioxide is one of the most prominent gas causing global warming, therefore, initiatives need to be taken to make equipment that is much more environment- friendly.
India is going to vastly benefit from the sector growth because we will have better highways, the monorail construction that is underway will get completed and the growing population will not have to compete for space. India is one of the first developing countries to have an independent MCE sector and to see it grow at a faster pace is heartening.