Page 60 - Built Expressions - Online Construction Magazine - November 2014 Issue

Cover Feature irrigation management for irrigation projects. While core irrigation projects may not be fnancially attractive, having the benefciary farmer associations in charge of O&M and revenue collection helps improve cost recovery. Irrigation facilities in Japan are often run through this route. In India, Andhra Pradesh and Gujarat have taken the lead. Financing incentives can also be dot.state.mn.us linked to the extent of cost recovery, as has been implemented in Gujarat. • Use of a single regulatory body and local delegation for execution: Creating a capital expenditures. However, • There is a lack of uniform national regulatory body for individual project renting penetration in India is much guidelines for safety and quality. categories can help streamline end- lower (7 to 8%) than in other large On-the-ground enforcement is a to-end coordination. This helps ECE markets (65% in the United challenge because of the fragmented convey a unifed stance to project States and 35% in China) because nature of the industry. (Small stakeholders and reduces delays of a tax regime that makes moving contractors make up about three- that result from questions about equipment across states unviable. fourths of the industry.) jurisdiction. For example, Malaysia’s • India’s secondary market for used Construction Industry Development equipment is underdeveloped. Components Board establishes regulations and • Recovery is a big challenge for non- • There is a high variability in legislations for construction. In bank fnance companies, the major OEM demand owing to market addition, more autonomy for local providers of ECE fnancing for whom fuctuations, which makes capacity bodies in terms of execution freedom regulations pertaining to defaulters planning diffcult for component and tax revenue collections, with and bad debts are not very favourable. providers. incentives aligned to implementation • India is a market where component achievements, can help speed up Availability of skilled manpower suppliers tend to focus on items projects. In Nordic countries, local • As the ECE industry continues to grow, at the lower end of the technology taxes account for more than half the need for trained operators and spectrum, while relying on imports of government spending, with mechanics will increase proportionately. for high-tech items. Consequently, execution responsibility delegated to Availability of skilled workers is likely there is a gap in terms of technology local municipal bodies. to be an issue. Multiple entities from adoption at the supplier end, where the government, ECE companies, and the market demand for higher Challenges in the ECE Ecosystem industry bodies are working to solve connectivity and compliance to fuel In addition to addressing infrastructure the skill gap issue, but coordination economy regulations is not met challenges, the ECE industry achieving among these agencies can be with indigenously manufactured its full potential will hinge on improved. components. addressing challenges in three areas of • Most construction-equipment users • Suppliers are also constrained for the ECE ecosystem: are small players who prefer on- operating margins because the the-job training for operators and market is very price and value financing mechanics and are unwilling to pay a conscious. • Original equipment manufacturers premium for qualifed workers. (OEMs) in India offer limited • Specialized courses on construction Ecosystem Challenges fnancing options, and payment equipment operations are not a part An array of initiatives can be taken up terms for frst-time users are often of vocational training at industrial and expanded, based on best practices unfavourable. The result is that training institutes because the high in ECE and adjacent industries, such access to fnancing prevents many cost of equipment makes hands-on as automotive. prospective users from buying. training expensive. ECE training • Renting is a good option for users institutes run by OEMs tend to be Financing with an eye on limiting their large expensive for low-income groups. • OEMs can take a more active role PG 60 Built Expressions Vol: 3 Issue: 11 November 2014