Working with Imported Construction Equipment in India
Although off late there is a strong sentiment amongst the masses for #VocalForLocal and using Indian machines it becomes very important to take an overall logical and grounded outlook on use of local construction equipment rather than taking an emotional decision which in the long run hampers the country’s development plans. The irony however that can be seen today is that every construction equipment manufacturer selling in India is shouting #VocalForLocal despite them importing most of machines or having foreign investments/partnerships/JV’s or importing technology from other countries. Understanding few of the related aspects will help us get a better perspective for making the right choice.
How did imported construction equipment come to India?
As India got its independence later compared to European, American or other Asian countries, the development story for India also started much later. As a result, it was easy to adopt the practices of developed nations and for manufacturers in developed nations also it was easy to give products to the developing nations. The major influx of construction equipment manufactures in India happened after 1992 economic reforms after which it was easier for these manufactures to set up base in India.
The benefits for these manufactures for selling in India were:
1)The older/obsolete models in their countries were still new technology in India
2)No modification/new design or major cost to create the product for India. Jut make some changes to suit Indian conditions and it was enough.
3)Tax holidays and other investment benefits leading to higher profits
4)India was a nascent market with very few binding laws and low demand from customer end. It was an “easy to tackle” market
5)Less competition and hence higher margins/volumes
6)Trust of people in imported brands over Indian brands
The benefits for equipment users then were:
1)Proven reliable product available
2)Ability to do work better/faster
3)Mechanized solution reducing dependence on labor
4)Higher productivity hence higher business/profits
However, in the last 20 years the growth in India has been tremendous, the rate being much higher than those in developing nations, in effect bridging the gap between India and other developed countries.
Today Indian contractors are educated, tech savvy and up to date on world class technologies in their field and the costs associated, however on the side of equipment manufacturers from outside India who were popular in India there have been a few missed opportunities like:
1)Today also these manufacturers are modifying their products to suit India and have not started designing and manufacturing products focused at Indian conditions/customers
2)They have not invested in India in localizing their products as a result of which their customers have to bear additional burden of import duties and taxes as tax holidays are no longer available
3)They have not invested in increasing profits of their Indian customers but rather have focused on increasing profits and higher remittances to their parent organizations as a result of which the customers only use their products till they do not have a better option and mostly not out of faith/gratitude
4)They had underwritten the ability of Indian manufactures to make quality construction equipment
From the customer point of view today the products from these foreign manufacturers are
1)Costly and unprofitable because of the higher cost
2)Leading to losses due to spare parts availability issues
3)Profit eating because of the higher spare parts cost
4)Difficult to sell/resale due to above reasons at good price and quickly
5)Not adding much value compared to other local products available in India today
6)Almost similar technology and life as compared to few local manufactures
7)Difficult for local mechanics to maintain/repair leading to higher downtime and repair costs
Today’s Indian contractors want latest technology at affordable cost and higher profits which is only possible if products are “Made in India”, “Made for India” and “Made with India”(Made with Inputs from Indian contractors and users) and there are only a handful of companies who have been able to crack this code.
One standout example for this is the RoadMaster series of motor graders launched by Mahindra in 2017 which in less than 3 years has become the second largest grader manufacturer and seller in India reaching to around 20% market share in such a short time leaving behind reputed brands in the field and also well poised to become the number one grader company in India soon because most other competing manufactures in India even today,
1)Do not have “Made for India” products
2)Do not have well established support network
3)Do not have easily accessible and cheap spare parts and service
4)Still import motor graders from China or other countries
5)Have no confirmation of serving customers in India as they are not based out of India
In view of the above points it is very clear that “Working with Imported Construction Equipment” in India is today not by choice but by lack of local quality options available but with increase in local manufacturers like Mahindra providing quality “Made for India” products with required productivity at affordable costs, the users are shifting to these manufacturers due to the inherent benefits which clearly outweigh the benefits from using imported construction equipments.