New Delhi: The National Bank for Financing Infrastructure and Development, or NABFID, has laid the foundation stone for a policy framework including building superstructure to provide innovative financing solutions and opportunities for players, said KV Kamath, President, NABFID. said.
He was delivering the inaugural address at the third annual conference organized by the Association of Indian Construction Equipment Manufacturers (ICEMA) – a body affiliated to CII – in Mumbai on Tuesday.
The conclave discussed the current infrastructure and CE financing landscape in the country, and identified the financial challenges faced by developers and construction equipment buyers. The experts also shared views on potentially innovative financing solutions that could help bridge the existing funding gap.
“As NaBFID maintains the financing ecosystem for infrastructure in the country, there will be many opportunities for innovative financing solutions and players to emerge. The construction equipment industry in India has an opportunity to be a potentially innovative solution, the epitome of dematerialisation,” Kamath said.
Construction Equipment (CE) investment in a typical infrastructure development project is 20-30%. While it helps in bringing the far flung corners of the country into the mainstream of economic development, the potential of the Indian CE industry is limited by its access to finance. The industry in India relies heavily on finance, with about 90% of buyers availing finance.
“With the projected growth in India’s infrastructure and the associated development of the CE sector, it is imperative to further strengthen the financial ecosystem of the country to meet the growing finance requirement of the infrastructure and CE industry. The infrastructure development plans of the government are Going forward, access to long-term finance is critical to enable financing of construction equipment”, said Dimitrov Krishnan, President ICEMA and Managing Director, Volvo CE India Pvt Ltd.
ICEMA along with Deloitte has released a report on “Innovative Financing Solutions: Accelerating India’s Infrastructure Development”.
“A major catalyst for the construction industry, construction equipment requires policy interventions to prevent India from meeting its infrastructure targets and consequently undermining its aspiration for a $5 trillion economy. The industry needs alternative financing and business models, advanced training facilities, and can be a significant source of jobs for skilled workers, said Atul Dhawan, chairperson, Deloitte India.
“The complex structure of the Indian CE industry requires that financiers look beyond end user financing and create innovative solutions for value chain partner financing, working capital financing and human capital development financing. The biggest challenge for MSMEs is access to finance which will need to be addressed quickly,” said V Vivekananda, Vice President, ICEMA and Managing Director, Caterpillar India Pvt Ltd.
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