Sanjeev Bajaj from Escorts Kubota shares views on L1 Bidding System

As manufacturers, we want to add value, introduce new features, and innovate, but these aspects are often overlooked when decisions are purely L1-based.

Sanjeev Bajaj
Chief Officer
Escorts Kubota

Balancing L1 with Quality

The L1 system has been in place for quite some time, and I don’t think there is anything wrong with the system per se. Competition is important, and the best price should be discovered. But this should never come at the cost of quality. Today, many road contractors feel it has become very difficult to sustain because of aggressive undercutting by new players. This not only impacts their revenues but often results in lower-quality project outcomes.

There has to be a balance. L1 should be combined with minimum quality standards and proper due diligence, right from the DPR stage through various phases of project execution. The system can continue, but it must be supported by these checkpoints to ensure that neither the quality nor the pace of projects is compromised.

Impact on Equipment Choices

There has definitely been a shift in buyer preference toward lower-cost equipment due to L1 pressures. This is particularly visible with government agencies and large corporates, where price becomes the main deciding factor. As manufacturers, we want to add value, introduce new features, and innovate, but these aspects are often overlooked when decisions are purely L1-based. While a large part of our business comes from retail customers, so the impact is smaller for us, manufacturers who predominantly supply to the government face significant challenges, affecting both innovation and long-term growth.

Policymakers’ Role in Driving Competitiveness

India’s construction equipment and infrastructure industry has evolved to execute global projects competitively. Policymakers need to strike a balance between controlling project costs and showcasing what our industry can achieve. Companies must invest in CapEx, innovation, advanced equipment, and skilled manpower, which requires fair returns over time. To facilitate this, DPRs must specify practical and accurate machinery and technology requirements, ensuring projects are executed with the right tools and methods. By aligning manufacturers, industry players, and government bodies, it is possible to balance cost efficiency, quality execution, and global competitiveness, managing project costs without compromising quality, profitability, or long-term capability building, creating a true win-win for all.