Chennai: The Indian infrastructure equipment industry have to focus on research and development (R&D), service delivery capabilities to cash on the boom in investment in infrastructure sector. According to a Confederation of Indian Industry (CII)- KPMG study the domestic infrastructure equipment sector is expected to grow to $4.2 billion size from $1.95 billion in 2004 owing to increasing investment in infrastructure, globalisation and availability of engineering talent.

According to the study the new infrastructure investment by the government and the private sector put together for 2004-09 is estimated to the tune of $141 billion and for the infrastructure equipment industry there is an opportunity of $18 billion.

The $1.9-billion infrastructure equipment market comprises of earthmoving, mining, road construction, material handling and concreting equipments. Of these the earthmoving and road construction equipment with a turnover of $1.09 billion, is the biggest segment. The market size for tunnelling and drilling equipments used in mining applications is estimated to be around $216 million. The material handling, concreting and material preparation equipment together share the balance pie.

Availability of easy finance is a major advantage for the growth in the demand for infrastructure equipments. The infrastructure equipment-financing segment is growing over 38 per cent in the last three years. The interesting aspect is that the buyers of these giant equipments are not the end users. The users prefer renting of infrastructure equipment so that large investment, maintenance expense and the risk of technological obsolescence are avoided. According to the CII-KPMG study the rental market is expected to boom soon.

The equipment manufacturers and the owners find the lack of strong vendor base as a problem. The manufacturers import key components like hydraulic aggregates, steel tubes, heavy-duty bearings, tyres and others.