With the Union Budget scheduled in the second week of July, the entire industry seems to be on a highly expectant mood with the hope that the government will now shift to higher gear for bold, long-term and deep fiscal economic reforms.
A Chinese proverb reads thus 'When the winds of change blow, some people build walls, and others, windmills!'
What has been unveiled, to say the least, is an ambitious agenda re-scripting the growth story; which seems more than powerful to give a jolt to the 'stoic slumber', the industry has been forced to over the last two years. Intensions are crystal clear to restore the economy to high-growth path the discordant pieces of the puzzle slowly falling to synchrony. Zooming in on the 10-year infrastructure revival plan be it fast-tracking PPP mechanism, modernisation of railways, creating diamond quadrilateral project of high speed trains, networking freight corridors, time-bound national highway programmes, promoting low cost airports, development of ports and inland and coastal waterways, creation of 100 smart cities even a radical and hardcore sceptic who dents the hope with a simple question of 'where is the money, boss!' seems to take the 'willing suspension of disbelief' theory.
Will the government be able to 'Walk the Talk'?
Sunil Chaturvedi, Managing Director & CEO, TIPL, is quite optimistic when he says that the government seems to be 'walking the talk'. He says, "After several long years of wait, driving economic growth through the core agenda of infrastructure is back as the central piece of policy perspective. We are delighted at this critically-needed pronouncement. There are multiple steps already in sight towards creating an intense focus on infrastructure growth and they are all harmonious and in complete sync with the policy objectives. For once, the government seems to be walking the talk, and it's a real welcome change. The equipment industry is looking at these developments with a lot of sense of optimism."
Amit Gossain, President, Indian Construction Equipment Manufactures' Association (iCEMA), is quite optimistic about the new government at centre. He says, "We have a lot of hope from the new government, which we are sure will work hard to ensure projects of national importance are on the ground very quickly. This will be good for infrastructure, the equipment industry, and of course India."
Says Wilfried Theissen, Managing Director, Putzmeister Concrete Machinery, "The least I can say is that the plan presented by the Modi government is exceptionally ambitious and surpasses even the most optimistic expectations after his landslide victory in the recent Lok Sabha elections. But will India finally live up to the expectations of its own people and the international business community? I sincerely hope so, and we at Putzmeister are prepared, enthusiastic and more than ready to live up to any challenges, and at the same time, we are aware that exciting times are lying ahead of us. It will be an honour for Putzmeister to put our equipment, technical know-how and experience at the service of our honourable customers and build together the India of future."
Raman Joshi, Vice President and General Manager for Asia-Pacific, Manitowoc Cranes, avers: "In an election year, there is always some uncertainty. Now that the uncertainty is over, we can look ahead to some prospective developments that we hope will have a positive impact on our industry. With Prime Minister Narendra Modi's strong background in economic development, infrastructure and creating a business-friendly atmosphere, we hope he will be able to drive through the necessary changes to push the Indian economy to the next level."
There is new vigour, today, and the industry is really hopeful for a better trajectory of growth. It is not just 'hoping against hope' as in the past years.
Says AM Muralidharan, President, Volvo CE, India, "We hope the new government will be able to execute on its promises of large infrastructure development, such as better road corridors, high-speed railways and modernisation. The role of infrastructure development and leadership in India for catalysing growth and economic development is well understood, and we are eager to see the government take definitive and priority action in this regard." According to him, there is an urgent need for the new government to understand the reasons for slowdown in infrastructure projects and take definitive and priority actions to expedite them.
Muralidharan adds, "We expect flexibility in PPP and BOT projects and friendlier regulations for contractors as well as massive investments in each of the state-run and centralised infrastructure projects. These infrastructure projects should also be closely monitored to ensure proper and on-time execution. The government should impose stronger rules for land acquisitions and we also expect the mining policies to change and the sector to open up. The Goods and Services Tax (GST) model has to be given a nod and lastly, we expect the new government to focus on increasing exports." The CE industry is very confident of a revival, and the change taking place is surely not looking for any more excuses from the new government.
Says Anand Sundaresan, Vice Chairman and Managing Director, Schwing Stetter (India), "Unveiling the agenda of the 10-year infrastructure revival plan definitely brings back the confidence of the CE industry. For quite a sometime, our country was looking for these projects to get announced. Speed, scale and skill will play an important role in achieving this agenda. A stable government at the Centre with clear majority should definitely be capable of achieving this."
"Things are looking better and the mood is positive. In the next five months, things are going to change. With these positive sentiments, investments will start coming in and things will start rolling by itself. The road sector was stalled for the last two years and now it has started moving. People in the industry are hopeful that things are going to be better," says Sudhir Hoshing, CEO Roads Business, Reliance Infrastructure. "This translates into fresh investment for equipment and machinery," he adds.
"There is a huge moral upliftment for the road builders and developers community because of this change in government and the various action plans announced by them. So, we are very much encouraged," says DK Sen, Senior Vice President & Head Transportation Infrastructure, L&T Construction. He adds, "At the same time, the reality is that it will take a lot of time for the investment to come. All of us know that the government pockets are empty and there is no money. They are thinking of some ambitious plans either through foreign investment or private funding. It is a fact that there is hardly any money to invest in the private sector, as all big infrastructure developers are stressed because they have already invested in several projects where either projects are stalled or facing some issues. The money for new projects is difficult to come."
Sen wants some quick hard-hitting decision from the new government. He says, "In this case, a lot of policy improvements and some hard decisions are required by the government, and also the government has to give some assurance in terms of risk mitigations. Because of the revenue risk and other procedural risks like the land acquisition, I don't think the foreign players will come and invest money. So the government has to do some structural changes in its policies. If all these are done, in another one year, things will start moving. But even if that happens, it is great news for us because we almost went to the point of despair that nothing will happen and will continue like this. However, in the changed environment, things will improve, but it will take time and in this period, nothing much is likely to happen, only some stalled projects may take off which is an important thing."
Speaking on the scope of fresh investments for equipment and machinery Sen cautiously words it. "Infrastructure projects largely depend on equipment and machinery. Large construction houses already own their set of equipment. Currently, due to the stalled projects, the revenue profitability has come down in most of the construction sector players because they could not do much in the last two to three years. They have the requisite number of plant and equipment to do the jobs. So immediately once the stalled projects start, the existing plant and equipment will be put to use. Once the new projects come, they have to definitely scale up and buy new equipment. It takes one year for things to improve then in the next one to one-and-a-half years, there will be requirement of buying new plant and machinery to service that kind of a requirement. So definitely it is going to improve, but will take time." The feelers from the government also indicate the same tale that they do not have the luxury of underperformance. To quote Finane Minister Arun Jaitley, "The burden on our government is going to be much higher because people expect us to do more." That the choice before the government is to perform or perish.
Yes, there is a perceptible sign of urgency an urgency to bring tangible results, which was evident when Railway Minister Sadananda Gowda recently spoke in favour of FDI in Railways. He said, "The new government stands for change and faster development." No wonder, he reiterated the government's mantra, 'either perform or perish'. With the Union Budget scheduled in the second week of July, the entire industry seems to be on a highly expectant mood, with the hope that the government will now shift to higher gear for bold, long-term and deep fiscal economic reforms. This will catapult the Indian economy back to high growth trajectory.