By Subir Kumar Chowdhury
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 challenges around liquidity and fresh investments.
The revival of demand is important at this stage and the government has been cognizant of this. It has been taking steps to revive growth. Noteworthy is being the significant announcements in infrastructure spends and a reduction in corporate tax rates in addition to the Reserve Bank of India’s support through improved liquidity and lowering of interest rates.
The importance of developing infrastructure for the growth of the economy is critical. Any project has both, immediate as well as long term benefits in terms of employment and demand consumption. The recent announcement of Rs 100 lakh crores in Infrastructure over the next five years is welcome as it comes at a time when the Industry has built capacity and capability over the years, and parts of which have remained underutilized in the immediate past.
It is also heartening that the announced Infra spends are in projects that are spread across power, renewables, roads, railways and urban development and will help create more growth drivers for our Industry. The investment cycle needs to re-instated, and large infrastructure projects are vital to achieving that.
Thus, it is critical that the upcoming budget keeps the momentum going and creates funding opportunities to be able to see this allocation through. Energizing the PPP (Public-Private Partnership) model and a re-look at asset re-monetization can play an important role in addressing funding related constraints. NBFCs will continue to play an important part in financing our equipment and thus the regulatory framework for NBFC growth will also be essential.
Infrastructure will continue to be a key growth driver in the investment lead growth philosophy. The construction equipment industry is critical in fulfilling the $5 trillion economy dream of India and as an industry we are hopeful that the Budget helps un-lock the opportunities that the sector has to offer.
(The author is the managing director and chief executive of JCB India)