The Supreme Court's recent clarification that construction equipment and agricultural equipment are not included in the BS-III vehicle ban was a sigh of relief to the concerned industry. The role of the Indian Construction Equipment Manufacturers' Association (ICEMA) and the Tractor Manufacturers' Association (TMA) was commendable as they could successfully invite the apex court's attention into the realities behind the emission norms. It was a sheer lack of awareness of the concerned authorities on the emission norms that lead to such a chaotic situation that forced some companies contemplating on halting their production. Equipment India is happy to be part of this move along with ICEMA and TMA to successfully clear all the ambiguities related to the BS-III vehicle ban (please refer to our Special Report on pg 30).
The Central Government's recent announcement on GST rates for 1,211 items is an important move towards the implementation of GST by July 1, 2017. While there are four tax brackets of 5, 12, 18, and 28 per cent, the classification of construction and mining equipment under 28 per cent tax bracket is punitive. Why tax construction equipment which is required for expediting the execution of infrastructure projects under the same tax bracket as luxury cars? Since nearly 70 per cent of the equipment is purchased by entrepreneurs, rental companies, hiring companies and such other SMEs, this high incidence of tax will not be able to be passed on and would hurt the growth of mechanised execution of projects. ICEMA has appealed for a 12 per cent rate and given that Rs 3.96 lakh crore will be spent on infrastructure as per the Union Budget, this lower rate of 12 per cent would be beneficial for the growth of this industry, which has acquired a status as an important sourcing hub.
It is evident from industry and analytical reports that CE industry performed well in 2016 and the same is visible through this year as well. Being one of the majorly used equipment, the growth of hydraulic excavators was enormous during 2016 with different estimates show the demand growth at 40-50 per cent. According to industry players, the growth in Q1 of 2017 is at around 25-30 per cent over the corresponding period last year. The increase in the demand for hydraulic excavators in 2016 was primarily driven by large scale infrastructure projects implemented during the period, and the projects which are in the pipeline. Since the average size of infrastructure projects is growing, there is an increase in the demand for specialised machinery like tracked excavators. As the market matures, and projects get bigger, customers are favouring the improved productivity and efficiency that excavators can deliver in earthmoving applications. Read our Cover Story to get the exhaustive details of excavator market.
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