Why mini excavators are slowly gaining in popularity in India

Image: JCB

Backhoe loaders are by some distance the most popular type of construction equipment sold in India and that doesn’t look likely to change any time soon.

But there are signs that mini excavators, already so popular in more mature construction equipment markets like Western Europe, North America, Japan, and most recently China, are starting to gain in popularity, albeit gradually.

That was one of the findings from a comprehensive new market report examining the construction equipment industry in India by Off-Highway Research.

Sales of mini excavators have grown during four of the last five years in India, according to Off-Highway Research’s data, with the increases interrupted only by a slight dip in sales in 2020 during the covid-19 pandemic.

In 2018, they rose 29% year on year to 1,322 units but by 2022 that figure had more than doubled to 2,736 units.

Off-Highway Research said that while the machines initially proved to be popular for use in plantations in the southern part of the country, the growing scarcity of manual labour and the need for better productivity, combined with the confined nature of projects in urban and semi-urban environments, has driven demand.

That surge in popularity shows little sign of slowing down any time soon, as sales jumped by 24% in the first half of 2023 against the same period in 2022.

Off-Highway Research is forecasting 15% growth to 3,150 units in 2023, although that will decline to 2,800 units in 2024, before increasing 13% to 3,600 units in 2026 and 11% to 4,000 units in 2027.

While it is high percentage growth, mini excavators remain a niche market in India, accounting only for around 3% of equipment sales currently. By comparison, in Europe they account for more than 40% of sales.

A market in growth

Off-Highway Research’s report forecast an increase in sales of construction and mining equipment overall for the five years to 2027.

Originally, it had forecast a 10% year-on-year rise in equipment sales in 2023 but has since revised that upwards slightly to 11% and a total of 92,350 units, as a result of higher-than-expected demand for some equipment including mobile cranes.

It then expects an 8% year-on-year decline in sales to 84,900 units in 2024 largely because a general election is due in the country. General elections in India can prove disruptive to the construction market, with a moratorium on awarding any public works contrats once an election is announced to avoid incumbents attempting to sway voters. 

Once the general election process is completed, Off-Highway Research has then forecast consistent year-on-year growth in 2025, 2026, and 2027 by which time it expects construction equipment sales to have reached 103,700 units.

Overall, it forecast that sales of construction equipment in India would grow 25% between 2022 and 2027, with the caveat that global inflation and political turmoil make the exercise difficult.

Off-Highway Research’s managing director Chris Sleight said, “India is a developing national and is the world’s fifth largest economy.

“Investing in high-quality infrastructure is crucial for accelerating economic growth and sustaining it in the long run.

“The government’s focus is on reforms in areas of physical, digital and regulatory infrastructure. Its initiatives, which including National Infrastructure Pipeline (NIP), National Monetisation Pipeline (NMP) and Public Private Partnership (PPP) are designed to increase private sector participation in the creation and development of new and existing infrastructure.”

The NIP alone has projected a total infrastructure investment of Rs111 trillion (US$1.5 trillion) during 2019-2024.

Backhoe loaders continue to predominate

While sales in certain classes of machine, such as mini excavators, are starting to rise, they are doing so from a low base as compared to the number one machine type in India, the backhoe loader.

Sales peaked at 45,552 units in 2018 and remained strong even in the year of the pandemic, when 38,030 were sold.

Off-Highway Research reported a 25% increase in sales during the first half of 2023 compared to the same period in 2022. And it retained its earlier forecast for sales to grow 7% to 38,000 units in 2023, before declining 5% to 36,000 in 2024 and then rising again in 2025 and 2026, when sales will hit the 40,000-unit mark and maintain that level into 2027.

“Demand for backhoe loaders will continue to remain strong and will continue to dominate the Indian construction equipment market for the foreseeable future,” Sleight said.

“However, sustaining high sales volumes is a challenge due to the machine’s declining profitability with the increase in machine price and inflation without a corresponding increase in rental rates due to intense competition.”

If you want to read the report in full, click here to access Off-Highway Research’s website for more details.