Infrastructure finance ecosystem to create opportunities for innovative models
- Construction equipment accounts for 20-30% of investment in a typical infrastructure development project. While it helps connect the remotest corners of the country bringing them into the mainstream of economic growth, the industry’s potential is limited by its access to finance
NEW DELHI: The National Bank for Financing Infrastructure and Development, or NaBFID, has put in place the foundation, including a policy framework, to build the superstructure to deliver opportunities for innovative financing solutions and players, said aid KV Kamath, chairman, NaBFID.
He was delivering the inaugural address at the 3rd annual conclave organised by Indian Construction Equipment Manufacturers Association (ICEMA) – an affiliated body of CII in Mumbai on Tuesday.
The conclave hosted discussions on current infrastructure and CE financing scenario in the country, and identified financing challenges faced by developers and construction equipment buyers. Experts also shared views on possible innovative financing solutions that can help address existing financing gaps.
“As NaBFID puts financing ecosystem in place for the infrastructure aggregates in the country, there will be several opportunities for innovative financing solutions and players to emerge. The construction equipment industry in India has the opportunity to epitomise dematerialisation, a possible innovative solution," said Kamath.
Construction equipment (CE) accounts for 20-30% of investment in a typical infrastructure development project. While it helps connect the remotest corners of the country bringing them into the mainstream of economic growth, the Indian CE industry’s potential is limited by its access to finance. This industry in India depended heavily on finance, with almost 90% buyers availing finance.
“With the anticipated growth in India’s infrastructure and related growth 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. For delivering on the Government’s infrastructure development plans enhanced access to long term finance is crucial which in turn is important for enabling financing of construction equipment”, said Dimitrov Krishnan, President ICEMA and Managing Director, Volvo CE India Pvt Ltd.
ICEMA, with Deloitte, has released a report on “Innovative Financing Solutions: Accelerating India's Infrastructure Development".
“Construction equipment, a key catalyst for the construction industry, needs policy interventions to mitigate the risk of India not meeting its infrastructure targets and consequently its aspiration for the $5 trillion economy. This industry needs alternative financing and business models, enhanced training facilities, amongst others, 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 necessitates that financiers look beyond end user financing and design 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. Vivekanand, vice president, ICEMA and managing director, Caterpillar India Pvt Ltd.
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First Published:15 Mar 2022, 05:17 PM IST
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