Don’t stymie equipment & technology

The recent inauguration of India’s longest bridge above water, the 9.15 km Dhola-Sadiya bridge by PM Modi coincided with the completion of three years of his government in office. Apart from underscoring the government’s emphasis on infrastructure, it also reaffirmed its resolve in improving its connectivity to the North-Eastern region. Built at a cost of Rs 1000 crores under PPP with Navayuga Engineering over river Brahmaputra and Lohit, the bridge cuts travel time by four hours. The Nitin Gadkari ministry has awarded 16,800 km of highway contracts and constructed around 8,500 km for the year ended March, taking the count up to 23 km per day. The 135 km Eastern Peripheral Expressway being built to decongest Delhi is scheduled for completion in the next few months. Similarly, other expressways to take off include Delhi-Meerut, Mumbai-Vadodara, the Dwarka Expressway, Bengaluru-Chennai, and Delhi-Jaipur. HAM is not popular yet and EPC is the easier way in accelerating the road development. The UDAN scheme envisages 45 new airports and 70 regional routes and caps ticket fares at Rs 2500 for one-hour flights. Six new ports are being developed and automobile and leather clusters have been planned alongside. Further, the 43 km long 12 lane Dedicated Freight Corridor costing Rs 3000 cr, from JNPT (Navi Mumbai) to Panvel being built to ease container traffic is also under construction. Yes, infrastructure bottlenecks are being addressed like never before and the pace is surely picking up.

However, the recent rate slabs announced under GST are likely to undermine the infrastructure plans as construction equipment has been put under the same category as luxury cars! The rate applicable is 28% and given the fact that 70% of the buyers of construction equipment are small entrepreneurs, small rental companies, hiring small set ups, their capacity to buy will get affected and may deter the pace at which infrastructure industry needs execution. A pace of 40 km per day from current 23 km a day would require extensive mechanization and the government must consider a slab that encourages its adoption.

Categorizing it with luxury cars is unfair and if the government thinks that this equipment is purchased by companies which will pass on the tax impact, they are ill advised. The budget has allocated a spend of Rs 3.96 lac crore on infrastructure during 2017-18 and this GST rate would result in inflating the cost apart from affecting the rightful demand. Even the ‘Make in India’ initiative which is helping the industry gain its status as an export hub will take a beating with the GST dampener. Given the importance of building infrastructure at a reasonable cost and the need for easing the pressure of high financial costs hurting the infrastructure industry, a rate of 12% for GST is being recommended by ICEMA, the industry body.

With smart infrastructure gaining ground as sensors pervade roads, ports, airports, public spaces, buildings, and with speed being of the essence, it is important that equipment and technology are granted a pivotal role and for that, it needs to be made affordable especially in sectors which are dominated by SMEs.