Dr Ritesh Chandrashekar Tiwari Director-Highways & Structures Egis India on the Road Construction Sector
Tell us more about the road construction sector, how has it evolved over the years?
Road construction industry has come a long way in the country. From being an industry that was driven by guesstimate to an industry that employs the latest technologies and scientific methods. Earlier the focus was on quantity only whereas today the focus has shifted to quantity and quality. Another major transition that you can see in the sector is professionalism. Earlier, anyone who could invest some money and had some influence could get road development contracts. Now one can see professional experts with lots of experience and expertise in the sector taking over. This has minimized the risks and maximised the returns. The stakeholders have taken notice of this and are committed to support professional companies whole-heartedly.
Where is this industry heading especially when many equipment manufacturers investing heavily in their production capacities?
As the sector is getting more and more professional, the need for professional equipment’s is on the rise. It is seen that some companies have started investing in developing their own R&D units as they have started seeing value in offering better products. The price is not the issue anymore. It is the best price and quality combination that is most likely to win in today’s scenario. With professional design and project management companies entering the sector, it is the need of the hour for manufacturers to offer competent world class machinery. So with the technological advancements being continuous, the industry is headed for specialization to deliver goods that can meet global expectations.
Tell us more about the Infrastructure initiatives, ground realities, Prospects & Challenges
India is the new epicenter of global economic progress. The whole world is investing in India under the Make in India project of the Government. This means, more raw materials and finished goods will be seen moving across the country. There will be massive urban mobility in search of opportunities and employment. India today sees itself as one of the fastest developing nations in the world and to keep up this momentum, the roads infrastructure needs to be robust. The e-commerce boom is adding more load to the road infrastructure as more and more people from the interiors of the nation are expecting goods and services at a fast pace. So there needs to more penetration of road infrastructure and better quality infrastructure that reduces downtime and delivery time. Lack of labor availability is a huge concern.
What are the issues and concerns in the road construction sector, which requires serious attention?
Most of the roads and highways are sponsored by the government. The private players still shy away from investing heavily in this sector. This is due to the long and sometimes unforeseen delays in the projects that cause many companies to bleed. Land allocation is still a very serious issue. Clearances still take time. And sometimes, trivial issues take precedence over the big picture causing unnecessary delays. There are lots of technologies which are modern and scientific (like RFID) but there are lack of funds which do not help in taking these initiatives to completion
What kind of government policies are required to bring in stability for the road construction sector?
Land allocation needs to be completed before the project starts. Offering better incentives to private players. Reduce bottlenecks to complete projects on time.
Impact of Demonetisation and GST on the road construction sector?
The road construction industry is a highly labor intense labor-intensive labors come from far corners of the country who do not have access to basic banking infrastructure or are not educated in banking practices. Therefore a lot of transactions end up being in cash and therefore keeping a track of the documentation is quite cumbersome. There needs to be some process improvements to make the same smooth. So yes, these are initial years for GST and demonetization, but I am sure with passing time, the GST will be a propeller and not a spoiler.
Demand Drivers of the road construction sector
As I mentioned, e-commerce and Make in India are the biggest drivers for the sector. Internal mobility of goods and people are also huge drivers for the sector. Tourism and related industries add to the demand of the construction sector.
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