For decades, the business of India’s construction equipment manufacturers was simple: you sold a machine, shook hands, and hoped the contractor came back for another one in five years. That model is slowing down. As the Indian infrastructure market matures, the world’s leading manufacturers, such as Volvo CE, are finding that the real money isn’t just in the metal; it’s in the bedrock of services.
Dimitrov Krishnan, Managing Director of Volvo CE India, highlighting this transition, said, “Services business is actually the bedrock of a stable construction equipment industry business performance,” he said on the sidelines of the EXCON 2025 event held in Bengaluru.
The latest available filings with the Ministry of Corporate Affairs may provide some perspective in this regard. The financial year ending March 31, 2024, provided a stark lesson in the value of this shift.
While the global economic climate and a local slowdown in road construction saw Volvo CE’s machine sales drop by 5%, the revenue from parts and services surged by 28%. The company’s topline stood at Rs 2,232.5 crore during the financial year ended March 2024, while operating profit was Rs 59.4 crore.
Today, services, a category that includes spare parts, repair contracts, and innovative digital monitoring, account for roughly 30% of the company’s topline revenue. It is a buffer against the cyclical nature of the industry, where government spending can fluctuate. Volvo CE holds roughly around 5% market share in India’s construction equipment industry.
The ‘Netflix’ of Excavators
Perhaps the most noticeable evolution in Volvo’s service arsenal is the growth of Equipment-as-a-Service (EaaS), which it launched around three years ago. In an industry where CAPEX — shorthand for the massive capital expenditure required to buy a machine outright — often scares off smaller contractors, OEMs such as Volvo CE have introduced a “pay-per-use” model.
It is, in essence, the “Netflix-ification” of heavy machinery. For example, instead of taking a massive loan to own a 20-ton excavator, a contractor pays for the hours the machine actually works. “The customers’ benefit is that they don’t have to invest in CAPEX,” says Krishnan. “They can use a machine using their operating costs… it is a good win-win for the customer and us.”
The EaaS segment alone has grown into a business worth nearly Rs 100 crore. The company is now targeting expanding this revenue multifold over the next five years. This expansion will include both diesel and electric machine offers on the “pay-per-use” model.
This subscription-based model has created an accidental, yet lucrative, secondary market. When a machine finishes a few years in the EaaS fleet, it enters its “second life” as a certified used machine.
“Because we have an equipment-as-a-service fleet, we also are able to offer to the market good-quality used equipment,” Krishnan notes. These machines, often with 8,000 to 12,000 hours of work behind them, still have half their life remaining. This allows smaller contractors, who might have previously settled for less reliable local brands, to buy a Volvo with a three-to-six-month warranty. It captures the entry-level market while ensuring the brand’s high-tech machinery remains ubiquitous across Indian worksites.
Localisation with Made-in-Bharat
While services provide the stability, localisation provides the competitive edge. Volvo’s latest offerings, the EC210 and the newly unveiled EC215, boast nearly 70% local content, thereby offering more competitive pricing while tailoring machines to the specific needs of the Indian market. Following feedback from over 1,000 customers who used the previous EC210 model, Volvo added a heavier undercarriage and a larger bucket to provide the stability required for Indian soil.
This commitment is being codified in brick and mortar with the upcoming Technology Centre in Bengaluru. The facility will focus on R&D (research and development) and further localisation, ensuring that the 4–5% of revenue Volvo reinvests in technology is spent on solving problems and bringing local innovations.
The Electric Frontier
The next frontier for India’s construction equipment industry is electrification. In a move that might surprise observers in Brussels or London, Krishnan believes India may transition to electric power faster than Europe.
The transition is being led by wheel loaders, used in ports, mines, and industrial sites, among others. These locations are islands of activity where charging infrastructure is easy to install. Volvo’s L120 Electric Wheel Loader is now in serial production and commercially available in India, the company said.
Krishnan estimates that 15–16% of the current wheel loader market could be electric today, potentially rising to 35–40% within five years. For OEMs like Volvo CE, this offers a new service opportunity: managing battery health and charging cycles as part of their holistic service ecosystem.
Navigating the Doldrums
The move to services comes at a critical time. The Indian road construction sector, long the heartbeat of the industry, has hit a minor doldrums. Market volumes are down about 13–14% as cash flows tighten and projects are stuck in arbitration.
Even in this weak road construction market, Volvo’s compactor machines, like the SD110, which traces its lineage back to the 1990s, are gaining market share. “We did not lose any volume, even though the market is down,” says Krishnan, attributing this to a massive dealer network that covers every nook and corner of the country through more than 350 locations.
The SD110 itself is an icon of the industry’s evolution. Once a luxury during the Golden Quadrilateral highway projects of the 2000s, vibratory compactors are now taken for granted on everything from state arteries to rural tracks.
A Road Towards 2035
Despite the current market dip, the long-term outlook remains bullish. Krishnan sees the industry doubling in size to 260,000 units by 2035, fuelled by massive projects like river linking and continued urbanisation.