The construction equipment industry is worried over an alarming trend of increasingly shady deals in exports.
09 Nov 2022 | 18907 Views | By Shahkar Abidi
It’s a serious charge that needs attention. About 5-15 percent of the total construction equipment sold in India are now allegedly finding their way into several Middle Eastern and African countries where they are being sold for huge profits, says Dimitrov Krishnan, MD, Volvo CE (India) and President, Indian Construction Equipment ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
It’s a serious charge that needs attention. About 5-15 percent of the total construction equipment sold in India are now allegedly finding their way into several Middle Eastern and African countries where they are being sold for huge profits, says Dimitrov Krishnan, MD, Volvo CE (India) and President, Indian Construction Equipment Manufacturers Association (ICEMA) – an influential lobby body representing over 95 percent of OEMs from the country. The problem is not in who makes the money at the end of the day, but in the manner the job is done.
What has caught the attention of ICEMA is the fact that unscrupulous operators are purchasing these machines using finance from lenders like banks. They then export the machines using fake documentation and vanish from the scene. 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 asset 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.
Krishnan says that a sour transaction also distorts global export markets for the OEMs operating in India. He added that taking strong offence of the development, the industry association has taken up the matter with Centre for its immediate intervention.
Dimitrov told Autocar Professional that construction equipment or 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.
“Our members are trying to control this by verifying and making sure that products are sold only to genuine buyers and not to people who are just out there to make a trade in it,” said Krishnan.
He added that the problem is increasingly becoming rampant as anywhere between 5-15 percent of all CE products sold in India, across all segments- including hydraulic excavators, wheel loaders, backhoe loaders, motor graders, vibratory compactors, cranes, dumpers, tippers, forklifts trucks and others.
“So, I think, a much stronger credit evaluation is required by the financers. Let's see how that gets controlled,” Dimitrov further continued.
The Indian construction equipment industry registered 14 percent (QoQ) decline in sales during Q1FY23, with 23,037 units sold as against 26,910 units during the corresponding period last fiscal. In terms of exports, the industry witnessed 1,738 units during Q1FY23 when compared with 1,369 units during a year-ago period.