In rapidly developing economies such as India, where the need for better infrastructure is increasing every day with a rise in population and the need to compete, the Government needs to further increase its spends in the infrastructure sector.

I am optimistic that the upcoming Union Budget will bring in good cheer to the infrastructure industry considering that the Government is planning to generate huge investments in the Twelfth Five-Year Plan.

The Construction equipment industry is a major contributor to the infrastructure sector which contributes to 5-6 per cent of total GDP of the country. The contribution of private sector in total infrastructure investment was around 34 per cent in the first two years of the Eleventh Five Year Plan and is expected to rise to 50 per cent in the Twelfth.

Need robust policy

While investment in infrastructure is increasing, the Government needs to make the land acquisition policy more robust in order to avoid project delays due to land acquisition problems. With the increase in infrastructure investment private players will now look forward to taking up more projects.

I believe that with more investment planned by the Government for infrastructure, funding of projects will not be a problem. In the current economic scenario, the input cost for infrastructure projects (steel, cement, etc) is pretty high, I am hoping there is a reduction in the costs.

This, in turn, can prove to be a positive move for construction equipment companies as infrastructure companies will look towards us for providing equipment.

Potential to grow

The Indian construction equipment market has the potential to grow six to seven times from total revenues of $3.3 billion in 2010 to $22.7 billion by 2020 and from over 60,000 units in 2010 to 3,30,000 units in 2020. The Indian ECE industry is classified into five segments: earthmoving equipment, concreting equipment, material-handling equipment, material processing equipment and road construction equipment.

With projects planned across India, a lot of inter-State transfer of construction equipment becomes crucial. I am hopeful that the Government will take necessary steps to reduce taxes on inter-State movement of equipment, which will make it easier not only for us but also for the infrastructure companies.

GST regime

In order to increase the quality of construction equipment, it will be a bonus if the goods and services tax (GST) regime kicks in this April. It will make our equipment sales easier between various States. A simplified common GST system will ensure multiple layers of levies are done away with as different States have multiple duty structures, causing pain each time a construction equipment manufacturer wants to sell between States.

While the infrastructure segment is critical for construction equipment manufacturers, there is strong potential for us in the mining sector as well which contributes to almost 2.9 per cent of India's GDP. However, in the last one year, the mining market has been rather flat. As the Indian mining industry grows, we will see both new and the existing mining players offer significant wealth creation opportunities to investors and construction equipment manufacturers.

But there are a few loopholes that can deter export of iron-ore, such as illegal mining and heavy export levy, which the Government should address in the Budget. The Government will need to come up with strict rules and regulations and a strong policy framework for the mining sector.

It is hoped the Government will also reduce export levy on iron ore fines to push exports. This will help construction equipment manufacturers a great deal, considering mining players will be able to take up more projects.

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