“Karnataka presents huge business opportunities for the Indian earthmoving and construction equipment (ECE) industry, as the State is embarking on major infrastructure development projects in roads & flyovers, industrial infrastructure and power,” said Mr V P Baligar, IAS, Principal Secretary, Department of Industries & Commerce, Government of Karnataka. The State Government is very keen to promote skill development to create a pool of human resources for the construction industry. It has promoted a State Level Mission for Skill Development and has setup Karnataka Skill Development Corporation that has trained over 50,000 candidates in several vocational and construction skills.
Delivering the Inaugural Address at the Conference on Construction Equipment Industry organized by the Indian Earthmoving & Construction Industry Association Ltd in association with Confederation of Indian Industry, here today, Mr Baligar said that the State is developing rural roads of about 10,000 kms at the cost of Rs 2,500 crore. It is spending US$ 1 billion every year towards infrastructure projects pertaining to roads and flyovers in Bangalore. The Bruhat Bangalore Mahanagara Palike will be spending Rs 22,000 crore – about US$ 4 billion, in the next 4-5 years, for various infrastructure projects. The Bangalore Metro Rail project is coming up at the estimated project cost of Rs 10,000 crore.
He said that Karnataka is the first state in India to promote as many as four minor airports in Public Private Partnership (PPP) mode. It has brought many regulatory changes to give fillip to infrastructure industry – the State has reduced the stamp duty from 7.5 to 6%, effecting about 20% decrease to give big boost to construction activities. The floor area ratio in Bangalore has also been doubled. Further, regulatory modifications related to acquisition of lands for roads and transfer of development rights are very much in favour of the industry.
The State is developing tier I and tier II cities across the State, towards which it will be spending US$ 200 million every year. To rebuild infrastructure at North Karnataka, which was affected by recent floods, the State government will be spending US$ 500 million in the next two years.
Mr Baligar said that the State needs 1000MW of power – it has approved power projects with a total capacity of 20,000 MW and is spending Rs 5000 crore every year on power generation.
In his address, Mr Vipin Sondhi, Chairman, Excon 2009, said that investing in infrastructure development is only the first step but the government in partnership with the private sector focus on several initiatives to make the growth rapid, sustainable and inclusive. Some of the important initiatives that would need immediate intervention are: changing the land acquisition norms; de-bottlenecking and speeding up of infrastructure projects of national importance - the government should consider identifying twenty such national projects and ensure that they run on schedule; speeding up of dispute resolution mechanisms; increasing the success rate of tendering PPP projects; reviving contracts for project acceleration and finally, skill development.
He said that if India can set the infrastructure equation right, it can increase the per capita income to US$ 150; create employment opportunities for about 30-35 million people in construction and allied sectors such as steel, cement, mining, etc; reduce unemployment rate by about 5-6% and lift 3-4% of people from poverty.
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In his Introductory Remarks, Mr Ranaveer Sinha, Chairman, Indian Earthmoving & Construction Industry Association Limited (IECIAL), said that the industry is seeing concerted government initiatives in infrastructure development and there is a political will and the policy makers understand that “this is the last bus for India to catch up with the developed world.”
Mr Sinha said that as per the estimates, the infrastructure spend for the Eleventh Five Year plan is US$ 500 billion. The average intensity of construction equipment is estimated to be 8%, which is about 1% for power projects and about 16% for roads. Going by the average, the potential size of equipment business during the Eleventh Five Year Plan can be as high as US$ 40 billion.
He said that there will be intense competition in the industry in India, as the markets in the developed nations including North America, Europe and Japan, continue to remain stagnant. The global players are looking at India and China, where the construction activities are poised for certain growth. Another challenge for the industry lies in meeting the demands of customers, who want more and more new technologies, cost effective alternatives and immediate deliveries. The sellers and manufacturers are expected to improve the value propositions, product features, and delivery time.
In his concluding remarks, Mr Jehangir Ardeshir, Chairman, Conference Steering Committee, IECIAL, said that the industry should work together and compete ethically, while the government has to create an enabling environment for the growth of the industry.