Not ready for policy intervention, Govt asks construction equipment makers to report "illegal exports" for case-by-case action

The government's investigative agencies have been informed of the growing trends of "illegal exports" of construction equipment using forged documents.

By Shahkar Abidi calendar 14 Feb 2023 Views icon4004 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp

The government's investigative agencies, who have been informed of the growing trends of "illegal exports" of construction equipment using forged documents, do not believe there is a need for any policy-related interventions. It has instead asked that OEMs notify them of any specific instances so that they can take the necessary action on a case-by-case basis. 

Dimitrov Krishnan, MD of Volvo Construction Equipment, said, "They do not see it as policy-related action, and it's more about taking action on a case-by-case basis." "That is where it stands," he added while speaking on the sidelines of Bauma CONEXPO 2023, held in Greater Noida. The  EC55 electric excavator, which Volvo Construction Equipment claims assists in decreasing energy costs by at least 50 percent and maintenance expenses by over 30 percent was among the assortment of machines on display at the event. 

Krishnan, highlighted that about 5–15% of the total construction equipment sold in India is now allegedly finding its way into several Middle Eastern and African countries, where it is being sold for huge profits.

This aspect has not only left the financers at severe risk in case of loan or mortgage defaulters, but the bigger problem is that they cannot repossess the assets as it has physically left the country. Several importing countries allow parallel imports (a non-counterfeit product imported from another country without the permission of the intellectual property owner) of construction equipment and this attracts illegal exporters who take advantage of the loopholes in the system.

From the Indian OEM's perspective, the sour transaction also distorts global export markets as machinery sold in India is done on the basis of local pricing, emission norms, technological parameters, service and other offerings that are different from norms of other countries. 

"So, I think that is a bigger issue and  as an industry association, we are, of course, going to bring specific cases to notice of  the government, so that they can take specific actions" he continued.

As per Krishnan, the construction equipment industry as a whole had a relatively bad year in the form of 2022. It grew by almost 20%- primarily driven by concreting products which finds usages in segments such as commercial real estate, urban infrastructure including metros among others. However, when it comes to earthmoving asset equipment, the growth turned out to be relatively slow on account of dullness in road construction until September when it had a negative growth of about 30%. The good news is that it picked up pace after that leading to 32 kilometers of road construction per day from around 17 kilometers per day until September. “I expect that it will continue to be strong now for the next 6 to 8 months".

Talking about the rural demand, Krishnan highlighted that rural markets which were heavily affected during the pandemic has been witnessing gradual improvement even  price increase of around 15-20% which happened due to the mandated emission norms further impacted  their purchasing capacities. He pointed out that backhoe loader which is an indicator of rural demand has yet not witnessed an uptick. "That is slowly picking up, but I would say it is in a, you know, still in the recovery stage, needs to recover a little bit more. I hope that 2023 will be a much stronger year from a rural demand perspective" Krishnan noted. 

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