Budget 2020

Govt’s moves open up opportunities

Subir Chowdhury | Updated on January 28, 2020 Published on January 27, 2020

construction-equipment

Energising PPP model can help the construction equipment sector

After a strong 2018, the earthmoving and construction equipment industry saw demand compression in 2019. The slowdown was attributed to a variety of factors, especially liquidity and investment challenges.

Revival in demand is important at this stage. Some of the steps taken by the government to revive growth areannouncements in infrastructure spends and a reduction in corporate tax rates. Also, the RBI has done its bit by improving liquidity and lowering interest rates.

Developing infrastructure for the growth of the economy is critical. Any project has immediate as well as long-term benefits in terms of employment and demand consumption.

The recent announcement of ₹100-lakh crore for infrastructure over the next five years is welcome as it comes at a time when the industry has built capacity and capability, parts of which have remained under-utilised in the immediate past.

It is also heartening that the infra spends have been announced in projects that are spread across power, renewables, roads, railways and urban development. This will help create more growth drivers for the industry.

The investment cycle needs to be re-instated and large infrastructure projects are vital to achieve that.

Thus, it is critical that the upcoming Budget keeps the momentum going and creates funding opportunities to see this allocation through. Energising the Public Private Partnership (PPP) model and taking a re-look at asset re-monetisation can address funding-related constraints. NBFCs will continue to play an important part in financing equipment and, thus, the regulatory framework for their growth is essential.

The construction equipment industry plays a vital role in achieving India’s dream of $5-trillion economy and it is hoped the Budget helps unlock the opportunities that the sector has to offer.

Subir Chowdhury, MD and CEO, JCB India

 

The writer is MD and CEO of JCB India. The views are personal.

Published on January 27, 2020
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