While India is fast on its way to becoming the test bed for global OEM ’s, the ECE market is still under-developed when compared to global standards. Limited customer education with regards to its benefits, lack of rental, leasing and used equipment market, lack of government support, lack of execution discipline, lack of skilled manpower, lack of original replacement parts, tighter monetary policy for equipment financing, poor up time of construction equipment are amongst many of the factors restricting the much required growth in the use of ECE.

Lets take a look at what initiatives the government and private players can take to boost the use of ECE in India.

Government Initiatives

  • Incentivise: The government can incentivise the bidders for having good track records in terms of timely completion of projects and safety. Additionally penalties should be awarded for time line delays in completion of projects. It will drive the contractors to make higher use of ECE’s.
  • Support equipment renting and leasing: Equipment leasing should be classified as either a good or a service instead of both to do away with double taxation. It will make the option of leasing equipment much more attractive to the contractors. Equipment rental regulations need to be brought on par with global standards to ensure that authorised rental players have a better proportion and the unauthorised players competing solely on pace are weeded out. India has the lowest rental penetration amongst all the developing nations at 7-8%.
  • Taxation and registration: National registration of ECE should be mandated and the taxation should be standardised across the country. That way using ECE will become more attractive an option due to huge savings on RTO costs and easier movement of machines.
  • Finance options: Policies need to be up in place to make it easier for NBFC’s to make timely collection of payments, move against defaulters and receive tax compensation for bad debts. It will help improve the financing eco system and access to equipment financing.
  • Safety norms: Safety rules and guidelines on par with developed nations should be put in place and compliance should be made mandatory. Stringent norms will push for increased use of ECE.
  • Skill development: The government in collaboration with construction, material handling and earthmoving equipment manufacturers should develop a council and curriculum for skill development required by the evolving industry.

  • OEM Initiatives

    • Communicating with end users: The OEM’s need to be more proactive in communicating to the end user benefits, improvements and the proper way of using their machines in a timely manner.
    • Ease of finance: OEM’s can play an active role in making finance easy available and easer by getting into tie ups with finance institutions, starting their own finale arms and setting up dealerships with financing options. The easier it is to finance the equipment, the more use of ECE will increase.
    • Collaboration with component suppliers: OEM’s can explore risk sharing contracts with component suppliers to improve component quality and suppliers with capacity planning.
    • Be it construction equipment, material handling or earth moving heavy equipment manufacturers, they will need to take initiatives and proactively work with the government to boost the use of ECE in India and make the most of the growth space available.