Economy

Construction equipment makers urge government to pay contractors faster

Mamuni Das New Delhi | Updated on July 22, 2019 Published on July 22, 2019

Construction equipment manufacturers hope for a ‘Diwali bonanza’ from the government. Speaking to BusinessLine, Vipin Sondhi, Chairman - CII Trade Fair Council, said: “We hope as always the festival, in October, will bring good news. But the government needs to ensure that the payment cycle for contractors — who build the roads and ports — improves.”

The manufacturers are gearing up to showcase latest equipment to prospective customers from West Asia, Africa and South-East Asia through Excon, the largest construction equipment exhibition in South Asia to be held in December . The domestic construction equipment market, which saw a whopping 38 per cent growth last year, has slipped 12 per cent in the last six months. Excerpts:

How are the different construction equipment markets performing?

In the last 12 months, most markets across the world with the exception of North America are declining. We are trying to reach out to the buyers from West Asia, Africa, South-East Asia – who are buyers of Indian construction equipment — the idea is to reach out to them well in advance. African markets are expected to grow over the next 5-15 years.

Don’t Indian construction makers supply to North America? And isn’t the African market largely occupied by Chinese makers given that China is funding a lot of infrastructure there?

North America is serviced by firms there like Caterpillar, John Deere. Make In India is trying to move forward in areas where there is best opportunity. So, we are not just targeting the immediate neighbouring markets but a wider region. For Africa, while Chinese firms exist, India is also trying. West Asia has a lot of contractors of Indian origin, which helps.

Aren’t protectionist policies impacting the export plans?

Africa and West Asia don’t have much of a construction equipment industry, so they import. Malaysia, the Philippines, Thailand, Indonesia do have construction equipment firms, but India has free trade agreements with them. So, they haven’t increased duties.

How is the construction industry gearing up for the new emission norms?

We are not governed by automobile emission norms. We come under a separate set of emission norms. Right now, we are moving to BS IV CEV norms. So, all wheeled construction equipment have to change into BS IV CEV, by October 1, 2020. And the tracked equipment, which operate in stone-breaking and quarrying have to meet the norms by April 1, 2022. This is for the domestic market. But for West Asia, Africa, there are no emission norms. However, we will make products of single standard for external markets. For the moment we are doing Bharat Stage III. We — most of the companies — make equipment to the standards followed in our country, and export similar products globally.

What will be the difference in pricing?

Not clear yet, but there will a significant difference in pricing. BS IV CEV requires higher level of electronics in the same equipment, which will increase costs. The electronics are required to ensure lower emission of sulphur dioxide and nitrogen dioxide levels.

Given that there is a slowdown in sales this year, what are the expectations from the government?

We hope as always our Diwali, in October, will bring good news. But the government needs to ensure that the payment cycle for contractors — who build the roads and ports — improves. These contractors should not face delayed payments. The industry has requested the government to bring an end to the NBFCs’ liquidity crisis, as they are the ones who fund those players that buy our equipment. The budget announcement about continuing focus on infrastructure — roads, rail, irrigation, water, pipeline — is a green light. We are waiting for the turnaround, now that the elections are over.

Published on July 22, 2019
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