‘Reduce GST on construction equipment’

Source: The Hitavada      Date: 06 Oct 2017 09:52:28


Business Bureau,

Massive Government spending in infrastructure projects will drive growth for the construction equipment industry, said Anand Sundaresan, Vice-Chairman and Managing Director of Schwing Stetter (India) Pvt Ltd while talking to The Hitavada on Thursday.

Sundaresan who is currently Chairman of Infrastructure Equipment Skill Council and Past President of Employers Federation of Southern India (EFSI) was in the city to attend the CII EXCON 2017 Road Show, said, Government is focusing on projects like the dedicated freight corridor, express highways, Metro Rail and road development in a big way. “Growth cannot come if it is unbalanced,” he said. Apart from these areas other sectors need attention like ports, power, defence, mining and real estate. “Much more can be done by the Government to spur growth and oil the wheels of the economy,” he added. He suggested that once a project is declared, it should be executed smoothly without any bottlenecks, legal issues, land acquisition problems, environment clearances etc. About 80 per cent of the land should be acquired and other issues be resolved before starting a mega project.

Before, Goods and Services Tax (GST) was introduced, 80 per cent of the construction equipment came under the 15 per cent and 18 per cent tax slabs. Post GST, more than 80 per cent of the equipments came under the 28 per cent tax slab. It has resulted in a rise of 10 per cent tax on 80 per cent of the equipments. This has a cascading affect on the industry and contractors.

He said that a representation had been sent to the Finance Minister Arun Jaitley to consider reducing the tax slab on construction equipments.
Furthermore, builders and contractors are confused on getting credit on purchases. “More clarity was needed from the Government on this issue,” he noted. Before GST, contractors had to pay 4 per cent tax on award contract. Post GST, contractors have to pay 12 per cent tax on Government contract and 18 per cent for private contract. “The increase in tax on contracts should be reduced,” he said.

Sundaresan emphasised that GST procedures should be simple and there should be less compliances. It should not be complicated. “GST is good for the country and will immensely benefit the economy in the long run if the issues are sorted out,” he added. He highlighted that Government should introduce a standard certified skill development certificate for operators of construction equipments. The National Skill Development Corporation and Government of India should certify the course.

He said that discussions were underway with the Government to make it mandatory for operators to upgrade their skills. It would help youth get proper training, upgrade their skills and become employable.

In order to make the ‘Make in India’ a reality, more R&D is required. Equipment manufacturers should make small equipments suited to Indian conditions. On defence industry, he said that Government should do away with the L1 policy in awarding contracts. Instead high performing equipments should be used in border areas which are crucial in sensitive places, he added.