India's construction equipment industry has sought initiatives to increase spending on infrastructure and policies for automotive sector as part of their Budget wishlist. As the government aspires to grow Indian economy to $5 trillion by 2025, the construction equipment (CE) industry hopes that Budget 2020 will unlock opportunities for the sector.
Over the years, the CE segment, one of the most volatile segments of the automotive industry, has become one of the fastest growing sectors due to investment in the infrastructure, construction and mining sector.
After a strong 2018, the industry witnessed demand compression in 2019, due to various factors, especially challenges around liquidity and fresh investments. The sector saw volume drop in key product categories, including backhoe, excavators and wheeled loaders, during the last calendar year amid a slowdown in road projects and a tight financing environment.
FULL COVERAGE:Union Budget 2020
The CE industry also faces some slowdown due to financing issues, delayed payments for ongoing infra projects, liquidity crisis in NBFC sector, which plays an important part for financing its equipment.
The upcoming budget should, therefore, include provisions for reviving demand growth by creating funding opportunities, energising the PPP (Public Private Partnership) model and re-looking at asset re-monetisation. The Union Budget 2020 will be presented by Finance Minister Nirmala Sitharaman on February 1.
According to industry experts, the Union Budget for FY21 is likely to focus on enhancing spending on infrastructure to boost economic growth which has slipped over six-year low of 4.5 per cent in July-September quarter.
Subir Kumar Chowdhury, MD and CEO, JCB India said the Union Budget 2020-21 should keep the momentum going and create funding opportunities. He lauded Modi government for taking steps to revive demand growth, including announcements in infrastructure spends and a reduction in corporate tax rates. Adding to it, the Reserve Bank of India (RBI) has supported through improved liquidity and lowering of interest rates.
"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."
He added that developing infrastructure is key for the growth of any economy and the recent announcement of Rs 100 lakh crore investment in infrastructure over the next five years is a welcome move as it comes at a time when the Industry has built capacity and capability over the years, and parts of which have remained underutilised in the immediate past.
By Chitranjan Kumar