Vertical growth potential – the Indian elevator industry

Posted By R. Eashwar Ramu On

The building & construction sector, one of the key drivers of the Indian economy, provides employment to over 40 million people and contributed to an estimated 7% of India’s GDP in 2019-20. However, this sector has been impacted on multiple fronts in recent years, from demonetisation and RERA implementation to the general economic slowdown. The pandemic and the ensuing lockdowns this year have taken a heavy toll of the B & C sector with cascading effect on many industries dependent on this sector, including the elevator industry. However, this sector is well on its way to revival and 2021 should set the foundation for good growth during the decade.

The elevator market in India has grown well over the last 3 decades, and the annual demand from a minuscule 3,000 units in 1991, has reached an estimated 78,000 units in 2019-20, making India the second largest elevator market in the world. The country had an estimated installed base of around 600,000 elevators, which indicates growing potential for the modernisation business. Valued at around INR 130 billion (~US$1.9 billion), the elevator industry in India is home to over 350 elevator manufacturers and of these, around 25 to 30 are national or regional players. In addition to the leading elevator manufacturers, viz. Schindler, Kone, Johnson, Otis, Mitsubishi and ThyssenKrupp, other international companies present in India include Fujitec, Hitachi, Kinetic Hyundai, and Toshiba. While the Indian component sector is well developed, import of components is quite significant, indicating significant investment opportunities.

Indian elevator market by type, 2019-20 (%)

Low and mid-rise buildings continue to account for a major share of elevator market; passenger elevators account for over 84%, and MRL has gained significantly in recent years; the home elevator market has also been buoyant.

Cities such as Mumbai, NCR, Pune, Bengaluru, Ahmedabad, and Chennai remain the key markets in terms of number of elevator units sold. Vertical growth has become visible in the ever-expanding cities of India, owing to the sharp appreciation in the cost of land. Apart from the large metropolitan cities, Tier I and Tier II cities are witnessing space crunch especially within the core city areas and have become key markets for elevators.

The country has moved up the value chain in terms of greater sophistication in elevator features such as energy efficient elevators, advanced safety mechanisms and improved aesthetics; however, there is still quite some distance to go to reach international standards. The current slow-down is clearly a temporary phenomenon and given the vast potential for the B & C sector in India, the elevator industry is poised to grow rapidly in the decades to come.