"A company investing Rs 100 crore or more in plant and machinery during the period April 1, 2013 to March 31, 2015 will be entitled to deduct an investment allowance of 15 per cent of the investment. This will be in addition to the current rates of depreciation. There will be enormous spill-over benefits to small and medium enterprises." This budget proposal by Finance Minister, P Chidambaram, has been a direct benefit for equipment companies which have identified India to be a sourcing hub as this would help such companies avoid any payment of tax for the first 3 to 5 years after investment altogether. Further, road projects of 3,000 km have been indicated to be launched across five states in the first six months of this financial year. This and some other budget proposals have been kind to the infrastructure sector. However, the real challenge lies in project execution by debottlenecking which is slowly gathering momentum too.

The CE industry foresees a very buoyant trend for earthmoving equipment for the next five years. As per industry inputs, construction equipment used in agriculture should have subsidies at par with that of agricultural equipment. Further, inclusion of earthmoving equipment in the Focus Product Scheme will go a long way towards upgrading the quality of the products. This will ensure further help in bringing advanced manufacturing skills in operations and will boost the image of India as the engineering hub for the world.

EQUIPMENT INDIA tried to find out the impact of the slowdown in the Chinese CE market on the Indian market. As per reports, the Chinese construction equipment industry constitutes 40 per cent of production capacity of the world. It produced 8.67 lakh units during 2007-11 and 9.98 lakh units between 2012-16. Secondly, it has a huge problem on its hands with the high level of receivables, slated to be in the region of $7 billion! Given the above fact, the supply tsunami can result in a tidal wave of dumping. The industry looks to putting restrictions on ports of entry for such imports, preferably at one port on each coast.

The current manufacturing capacity in China far exceeds domestic demand and therefore, the manufacturers would be keen to export to any potential market. This can impact the Indian market as well in the short term, if the machines are offered at low prices. That's what the CE industry is really worried about. The presence of Chinese equipment always puts a price and margins pressure on Indian manufacturers. So the major players need to strongly resist the inclination to fall into a price war, as everyone including the customer will be a loser. Instead, the industry need to focus more on a value-for-money strategy with the customers, as well as focus more on creating segments for products with similar technology and price levels.

It's all about the potential. The prime factor favouring the growth of the construction equipment industry is the sheer scale of work yet to be done in the infrastructure sector. With the FM having "budged" and "nudged" the infrastructure sector towards some growth momentum, the long-term story remains intact.