North Eastern Region Offers Enormous Potential for Construction & Mining Equipment

Mr. Arvind Garg, Larsen & Toubro Limited
Mr. Arvind Garg, Chairman, Conmac 2017 and Executive Vice-President- Construction & Mining Machinery, Larsen & Toubro Limited in an interview with S.A.Faridi gives an overview of the CE market in the north-eastern region, and highlights the contribution of CII’s Conmac in improving the technological and business status of the CE sector in the region. Major initiatives and policy reforms are also discussed. Excerpts:

As the Chairman of Conmac, how do you view this show different from the mainland shows (such as Excon & Bauma) in term of focus, product placement, region specific and the growing needs of mechanization?

ConMac is a unique show designed to cater to the needs of the North Eastern region. ConMac’s origin is under the aegis of the highly-successful Excon in terms of format and presentation. In fact, ConMac is a brand extension of Excon which was started in 2015. We are happy that we have had a successful 2nd edition in 2017.

In the present context with a lot of emphasis on speedy completion of Infrastructure projects and the Central Government’s special focus on the North East in accelerating the Infrastructure development of the region, I am happy to note that this CII initiative has worked alongside with Government of India’s Act East policy. It is CII’s constant endeavour in calibrating further such initiatives which are contributing to the overall economic development of the region. So ConMac is a special trade fair and a priority for the CE players when it comes to doing business in the North East.

The North Eastern Region (NER) has recorded an annual economic growth rate of over 8 percent in the last decade higher than the national average. The NER Vision 2020 as well as the Government of India’s 11th Five Year Plan emphasizes on expansion, maintenance and improvement of the road network at all levels from national highways to rural roads. The Government has approved 4,884 km new roads under the Special Accelerated Road Development Programme in the North East (SARDP-NE). These projects are time-bound and need efficient deployment of Construction Equipment, thus fueling demand in this region.

The NER, being rich in mineral resources such as Coal, Limestone, Iron Ore, Granite, Fireclay, Lithomarge, Fuller’s earth, Sillimanite and Glass Sand offers a huge potential for deployment of Construction and Mining Machinery.

Conmac 2017

How was the response of the recently concluded Conmac held in Guwahati, in terms of exhibitors, visitors, and business generated?

I have spoken to my peers in the CE Industry who had participated, and found their response very encouraging. I have personally met large-size contractors from Arunachal Pradesh, Meghalaya, Mizoram and Nagaland, besides delegations from Border Roads, Defence, Railways and Government Departments like PWD and Irrigation. There is an overall positive sentiment amongst equipment manufacturers and buyers.

Many customers have now started to discuss procuring machinery in large quantities. We expect a good order inflow from the North Eastern Region in the coming years. Overall, we find that the NER will be a significant demand driver for the CE business.

What was the main theme of this year’s show? As North-eastern states need compact equipment due to difficult hilly terrain with some extra power and end-to-end after sales service; do you think Conmac has satisfactorily addressed these region-specific issues?

At ConMac, a conference with the theme “Infrastructure Development in the North East Region - Focus on Roads & Highways” was organized by CII along with ICEMA (Indian Construction Equipment Manufacturers Association). The Conference mainly focused on developments of Roads and Highways in the region and technology update for accelerating Infrastructure development in the North East Region.

Participation of State Governments, Special Finance Pavilion by leading Financial Institutions, live demonstration etc., were the highlights. ConMac is designed as a showcase/knowledge platform for customers such as private contractors, builders, road/infrastructure developers, smart city/urban planning bodies, various user departments etc., to witness the latest technology, equipment and machinery displayed which will enable accelerated Infrastructure development needs of the region.

Please highlight the contribution of this show in improving the technological and business status of the CE sector in in the north-eastern region.

ConMac could effectively help in disseminating product information, accelerating infrastructure development, encourage local entrepreneurship, building awareness on new technology, educate operators on skill gaps, etc., and to widen the contractor base in the North East. It also encourages upcoming contractors to update their knowledge on the latest technologies and bring them on a common platform to work out cost-effective solutions and build an asset bank for the hiring segment.

ConMac 2017 had 120 exhibitors with 3400 business visitors from India and abroad (Bangladesh and Myanmar). CII, as an industry body, strongly believes it is our responsibility to put together an exhibition of this kind, which caters to the needs of contractors, government and other stake-holders. CII is happy with the tremendous response received from the region.

How is the CE Industry responding to Conmac? Where do you see the show in the coming years?

This edition was spread over 2,00,000 sqft exhibition display area with large OEMs like JCB, Larsen & Toubro, Komatsu, Tata Hitachi, TIPL (CAT), Mahindra & Mahindra, SANY, Schwing Stetter, BKT, Kobelco, MRF, BEML, SREI, KYB Conmat, Sandvik, Ajax Fiori, Action Construction, Wirtgen and others. It showcased a wide range of equipment and accessories and gave a flavour of the latest technologies offered for infrastructure development. I think the show has the potential to boost the sales of construction machinery in the coming years and we, as the representative of the CE industry, will make this an important trade fair.

What is your overview of the CE market in North Eastern region? How do you see the opportunities for the CE manufacturing players in the years ahead?

I am happy to share that we have released a report on Infrastructure Development in North East India – Opportunities for Indian Construction Equipment Industry, prepared by CII and ICEMA.

As per the report, the total value of ongoing projects in NER Region as on Nov 2016 is estimated to be ~ 220,000-230,000 crore (excluding Power Project cost), total investments being Rs.3,20,000 crore for future projects.

On the Road projects, the Special Accelerated Road Development Programme in North East (SARDP-NE) of the GOI was envisaged to be taken up in three parts—Phase A, phase B and the Arunachal Pradesh Package. Under Phase A, 3,115 km of roads out of 4,884 km were sanctioned till June 2016. Of this, 1,646 km has been completed with the first phase expected to close by June 2017. Phase B implementation is underway and the plans are as under.

Conmac

Other important roads like the NH306 - 90 km (56 mi) between the states of Assam and Mizoram, NH 15 - 111 km (69 mi), between Assam and the rest in Arunachal Pradesh, NH 415 -59 km between Banderdewa-AcP and Gohpur-Assam and NH 715 connecting Tejpur and Jhanji in Assam are being developed, which provide an excellent opportunity for Construction Equipment manufacturers to grow their business in NER.

What government initiatives are helping the CE industry to perform effectively and contribute to sector development?

The Government of India has laid greater emphasis on Infrastructure development, especially in the development of the Road infrastructure, Low-cost housing, Ports, Waterways and Airports across the country, besides the special focus on Roads and Railway infrastructure in the North East.

The move towards completion of projects through the EPC route is helping the industry recover from its earlier low, and register growth of over 20% across various product categories. This augurs well for the industry. Help from the Government in treating Construction Equipment as a vital input in Infra development in the country, ably supported by attractive GST rates would bolster our efforts towards sustained growth of the industry and would support our Honourable Prime Minister’s Make in India’ initiative and help complete projects in a cost-effective manner.

Pradhan Mantri Kaushal Vikas Yojana is another laudable effort from the Central Government in imparting/improving the skills of people associated with the Construction Equipment industry that will generate employment in multiple sectors on a sustained basis.

The North Eastern Region has recorded an annual economic growth rate of over 8 percent in the last decade, higher than the national average. As per the report ‘Opportunities for Indian Construction Equipment Industry’ prepared by CII and ICEMA, the total value of ongoing projects in NER Region as on Nov 2016 is estimated to be ~ 220,000-230,000 crore (excluding Power Project cost), total investments being Rs.3,20,000 crore for future projects.

What are your views on GST?

While the benefits like uniform taxation, abolition of various taxes like Entry Tax, LBT and Octroi will definitely benefit the CE industry, we are yet to have clarity on the classification of the various machinery and the rate of taxation. Today, the basic excise duty and the CST against the concessional C form takes the taxes to 14.5%. Plus there is an entry tax in some locations. If the GST rate of taxation is going to be attractive, it will provide an impetus to the industry. Our industry association - iCEMA - has requested the Government for consideration of Construction Equipment as a vital contributor to the national infra building activities and hence, apply attractive rates of GST for CE, which will give a big push to the industry.

For the customer, seamless movement of machines will help in easing business, and he will have a wider choice of projects across various geographies. This will also help in better deployment and utilization of assets. Simpler documentation will be a welcome decision by the industry.
NBM&CW April 2017
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