The construction equipment industry, transitioning to CEV Stage V emission norms by January 2025, anticipates a 12%-15% cost increase due to new safety and emission regulations. Dimitrov Krishnan, MD of Volvo CE India, noted that 40% of the market, regulated by CMVR norms, will require enhanced engines and safer cabins. The remaining 60%, including excavators, lack such regulations. Despite these challenges, the industry is growing, with a 15% increase in the first half of 2024 and 20% growth in 2023. Volvo CE is expanding domestically and internationally, to boost exports. The market could reach USD 25 billion by 2030.
The construction equipment industry in India is poised to experience a significant cost increase of 12% to 15% starting January 2025 due to the transition to the CEV Stage V non-road diesel engine emission norms. This increase is attributed to both enhanced safety and emission regulations.
Dimitrov Krishnan, Managing Director of Volvo CE India, explained that approximately 40% of the construction equipment (CE) market is governed by the Central Motor Vehicle Rules (CMVR) for road-going products such as compactors and loaders. The new regulations will necessitate the implementation of improved engines, sturdier cabins, and additional safety features. However, Krishnan pointed out that the remaining 60% of the CE market, which includes products like excavators, currently lacks CMVR regulations, and he emphasized the need to address this regulatory gap.
India's construction equipment industry has been experiencing robust growth, consistently achieving double-digit increases year on year. Krishnan highlighted that the industry saw a 15% growth in the first half of 2024 and a 20% sales growth in the calendar year 2023. This impressive performance remains despite the traditional slowdown in sales during general elections when infrastructure projects often come to a standstill.
Krishnan attributed the growth of India's CE market to the government's strong push for infrastructure development, noting that it is one of the few markets globally that is currently expanding. The market, valued at USD 8.5 billion, is projected by the Indian Construction Equipment Manufacturers' Association (ICEMA) to reach USD 25 billion by 2030.
Volvo CE, which recently launched its 20-tonne excavator EC210, is intensifying its efforts in the domestic market and looking to boost exports. Presently, the company exports 20% of its production, primarily compactors and excavators, to regions such as Southeast Asia, the Middle East, Africa, and Latin America. Krishnan mentioned ongoing discussions about global sourcing of components from India, with a final decision expected by the end of the year.
In addition to expanding its product offerings, Volvo CE is enhancing its value proposition with locally sourced engines from the Volvo Eicher Commercial Vehicles' Pithampur engine facility. Krishnan noted that the company has around 65% local content in its production in India, highlighting Volvo CE's commitment to increasing domestic manufacturing capabilities.
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