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Editorial
Tectonic Shift
Much to the nation's relief, the electoral verdict has validated
the need for a stable government at the Centre. Already, this
has boosted market sentiment leading to a marked improvement
in the business sentiment and inflow of foreign investment,
which together are expected to expedite recovery of the country’s
economy that has been reeling in the wake of the global meltdown.
Industries across the board hope for a new wave of reforms
that will stimulate demand, boost investment climate and,
without doubt, implement infrastructure development programmes
across the country that will put the economy on a high-growth
trajectory. The verdict has created a tectonic shift in the
sentiment.
There is enormous growth potential in the Indian construction
equipment industry. As per available data, the crane and construction
equipment market in India has the potential to grow five-fold
to over $ 10 billion (Rs 41,000 crore) by 2015. The current
market size of the industrial crane industry alone is estimated
at Rs 2,000 crore with a growth rate of 25 per cent per year.
Taking a conservative estimate, even if 60 per cent of the
planned projects take off, the cumulative market for crane
rentals is expected to be anywhere between Rs 2,900 and Rs
4,100 crore in the next five years.
The ambitious target of increasing the total investment in
infrastructure from around 5 per cent of the GDP in 2006-07
to 9 per cent by 2011-2012 by the Planning Commission will
bring plenty of opportunities. The lifting and loading business
is strongly driven by infrastructure investments, domestic
construction and optimised logistics concepts. Rapid development
towards integrated cargo handling solutions within the next
few years and projects such as the Dedicated Freight corridor
from Mumbai to Delhi and the Sagar Mala project, will help
the crane industry hook onto the growth trajectory. Infrastructure
is set to move at a steady pace, at least for the next decade.
Medium and high-end power projects will see light in the next
four years. Projects in cement, steel and various process-oriented
industries like fertilisers, chemicals etc, are set to expand
on existing capacities. This, of course, would only push the
volume of consumption for all project-oriented equipment,
right from excavation, mining, loading, lifting and various
forms of material handling equipment.
For equipment manufacturers, this means taking the initiative
to develop competitively priced equipment and expanding sales
networks while bolstering supply capabilities and capacities.
The government and the industry need to join hands to increase
trained manpower, which is one of the major challenges that
the industry faces.
Each state has its own set of tax structures, rules and tax
regulations, making movement of equipment cumbersome and costly,
thus adversely impacting the industry. The government needs
to create a favorable tax structure for both equipment suppliers
and customers. Also, implementing safety measures like restricting
ageing equipment, and encouraging regular training and safe
working practices are important steps.
Together, initiatives such as these will help increase the
demand for construction equipment and take the industry forward.
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