Looking at the macro scenario, India has seen a significant drop in GDP compared to other countries across the globe. The Indian government and the RBI have showcased that the GDP is expected to drop by 7.7 percent this current financial year. Well, it can go up a little higher as well, at around 8 percent. But, considering all the recent measures by the Indian government, the GDP is expected to bounce back by about 10 or 10.5 percent.
According to the RBI, in the next financial year of 2021-22, India should be slightly above the figures of 1920. Post this break-even, the country can look forward to resuming its growth path, which has an average of somewhere between 5.5 to 6 or 7 percent in the long term. So, looking at the broader scenario, our exports have to catch up as they are still hovering at around the 300 billion mark.
The building and construction sector plays a critical role, employing around 40 million people. Unfortunately, the world is still struggling to cope with the Pandemic aftershocks as trade has been impacted gravely by the subsequent lockdowns. But, 2021 has witnessed the green days in the building and construction sector, especially residential housing, as they move towards a joyous revival.
In this scenario, it’s essential to consider the government initiatives that push the demand for residential housing. The Reserve Bank has kept the interest rate at 4 percent, promoting investments.
The Finance Minister has recently announced a massive budget for infrastructure and smart cities. The focus is on the construction of public properties, including roads, airports, metros and railways. Hence, this is excellent news for the escalator industry, mainly because the demand will now shoot up. The market has been strangled at a few thousand escalators a year, but I think this spending on the infrastructure, mainly urban infrastructure, will change the entire game. It is time that the E&E of India will see its revival with increasing growth and potential technology advancements that abide by international standards.
The Indian elevator market, as per the MCT estimates, mounted up to around 78000 units in 2019-20. But, there are some questions regarding these numbers. For example, does this number include the refurbishments? Does it include the unorganized small sectors and towns?
Many smaller players out there in the market are not necessarily registered and might not be under the radar. Yes, that’s possible; there is an estimate that the unorganized sector probably accounts for about 10 to 15 percent of this. Some industry experts state it to be higher. There are more players out there; in fact, some sources quoted that there are 700 lift contractors in Maharashtra alone. So, in general, the country has surely moved fairly fast, matching up to the pace of the industrial revolution.
India has witnessed a huge trend towards taller buildings. Even though the government’s affordable housing schemes have slowed down the craze a bit, the numbers are still green.
During the last couple of years, the E&E industry has seen a slight dip, but we believe that the industry will surely pick up going forward.
The impact of the COVID-19 lockdown has slowed slow down the construction plans. In fact, in the worst-case scenario, the estimation goes up to a sad 25 percent dip. But, optimistically, I predict that in the next 4-5 years, we could see 13 to 14 percent growth. I think we will see a bounce back in 21-22, but after that, we might see in line with what new GDP product projections are more like a 7 to 8 percent beyond 2022. The country might expect to jump back to 9-10 percent by about 2024-25, not earlier than that.
And, as the country bounces back, so will the elevator and escalator industry!
