McKinsey study projects 5-fold growth for ECE industry

Bangalore, Nov 14 (UNI) Indian Earthmoving and Construction Equipment industry (ECE), spurred by rapid economic development, is on a threshold of massive growth that will out beat the IT industry and grow fivefold from its current size of US Dollar 2.3 billion to touch 12-13 billion dollars by 2015, according to a McKinsey study for CII.

Releasing the report 'ECE Vision 2015: Scaling new heights in the Indian ECE Industry' at the CII Excon-2007, the 4th Indian Construction Equipment and Technology Trade Fair here event Chairman Vipin Sondhi, who is also the MD and CEO of JCB India, said according to the report the revenue volume had recorded 40 per cent year on year growth since 2004 to reach 2.3 billion dollars. It uncovered a 40 billion dollar opportunity for the industry from now and 2015.

The report estimates the 'as usual' growth would create a market of eight billion dollars by 2015 and if a concerted push was given by the industry and government alike by promoting exports and provisioning of India specific products, it could result in an additional four billion dollar opportunity.

The study discussed the five trends that would shape the evolution of the industry and highlights the imperatives to realise this opportunity. This included growth opportunities like investment of 750 billion dollars in country's infrastructure development, increased involvement of global equipment manufacturers in India and opportunities for exports.

However, low cost imports from countries like China could pose a challenge but at present it was quite low at five per cent of the total ECE consumption, the report said.

McKinsey India Managing Director Adil Aainulbhai said the report was not a prediction but a highlights potential and challenges for the ECE industry. ''India can become top country in the World overtaking China in ECE manufacturing if it could sustain the present growth for the next decade-and-half'' the report said.

''For the industry to achieve its full potential players need to embark on strategic initiatives like introduction of India specific products, increase in mechanisation in the construction industry, improve cost positions and pioneer efforts to boost exports''.

The study concluded by outlining imperatives for the government, which had to complement the initiatives of industry players. Focus should be on availability of trained manpower as the current pace of the industry was likely to face a shortfall of three lakh trained operators by 2015. The other important factor to facilitate the fast progress of ECE industry was to remove tax anomaly. This would help in boosting exports and lower tax burdens that impede demand.

UNI