bauma CONEXPO bC India 2023 report

Self-belief and ambition for nation building in India

Shani Wallis, TunnelTalk

The mood at bC India 2023 in Noida/Delhi, was pumped and brimming with optimism and energy. This energy has transformed a reluctant powerhouse, as reported after the bC India expo in 2016, to a country forging its own destiny and with new determination and foresight after the three year hiatus of the Covid impact.

This self-belief is coming from the top, rather than being self-generated by the construction industry. The national Government of Prime Minister Narendra Modi (in Government since May 2014), and through his ministers of national infrastructure, is instilling in the populace, and internationally, a sense that India is on the cusp of great things, taking it out of the stagnation it has suffered in the past and onto the stage as one of the world’s top five economies. There is the good, and the good, about this Government promotion in self-belief and some downsides. First the good.

February 2023

In his show-opening address, on the day before release of the 2023 national budget, Shri Nitin Gadkari, Minister of Road Transport & Highways, reiterated the Modi Government’s aspiration of India becoming a 50 lakh crore INR economy by 2025. Understanding these numbers is truly confusing, but it is big - equivalent to about US$5 trillion. This is up from its GDP of about 3.18 lakh crore, about $3 trillion in 2021, and the prospects, by all accounts, are exponential with India’s growth rate outpacing leading countries of world in the coming years at 6-7-8% per year - significantly higher than USA, China, the European Union and Japan (Fig 1 and Table 1).

Where agriculture, mining and steel production have been traditional areas of economic activity, and IT, pharmaceuticals and aerospace are the newcomers, the current Government of India sees national infrastructure expansion as the key driver of growth in the coming years. As Minister Gadkari said: “India is the third largest

1. Top ranking GPD countries in 2022 as compiled and reported by the World Bank

Fig 1. Projected growth for India in GDP to 2027

© Statista 2023

construction equipment market in the world presently” after the USA and China, and recently overtaking Japan. “Making us number one in the world is my challenge to you construction companies and construction equipment suppliers. My next challenge to you is to make these units of equipment in India –including the components – and to become an exporter of these made in India machines.” Export is where India has recognised potential, to raise its meagre 1-2% of current global trade.

Where Minister Gadkari was the principal guest at the bC expo, other high ranking officials visiting the show included ShriNand Gopal Gupta, Cabinet Minister, Government of Uttar Pradesh State for Industrial Development, Export Promotion, NRI, Investment Promotion; and Director General Lt Gen Rajeev Chaudhary, of the Border Roads Organisation, part of the India Armed Forces and in charge of construction, operation and maintenance of 55,000km of roads in the border regions of north India in the Himalayas, including the new 9km long single-tube, bi-directional Atal or Rohtang tunnel at 3,000m elevation and opened in October 2020 by Prime Minister Modi. Officials of the national hydropower construction industry and directors

Above: Fig 2. Units of construction equipment sold in India since 2013

Below: Fig 3. Global construction equipment sales in 2022 as reported by the VDMA

of India’s major construction companies were also to be seen in attendance.

While the Border Roads Organisation has a strong national defence element, infrastructure construction is seen as a principal driver for nation building for several reasons. Under the theme The Future of Nation Building, and after charismatic Minister Gadkari’s inauguration speech, Rajesh Nath, Managing Director of VDMA India, a partner in organising the conference programme at the expo, said in an interview with TunnelTalk that he thought the speech “inspiring. The Minister gave us a clear roadmap for the industry for the coming years as well as the confidence that the central Government is backing us in these endeavours.”

For that road ahead, growth for the construction industry is clear. There are three mega cities in India – Mumbai, Delhi and Kolkata – and 46 cities of more than 1 million population. The need for airports, metros, roads, highways, railways, water, sewage, wastewater and stormwater management, and power generation, including nuclear, is tremendous. Building these facilities over the coming years will take all of the central Government’s promised increase in capital expenditure on infrastructure investment by 33% to 10 lakh crore INR (about US$122 billion) for 2023–24. This is about 3.3% of GDP and almost three times the outlay in 2019-20. More astonishing figures are offered by the World Bank which predicts that India will need an estimated capital investment of US$840 billion in urban infrastructure and municipal services in the next 15 years till 2036, or an average of $55 billion per annum, if it is to meet the needs of its fast-growing urban population. For those who have visited India, the need is absolutely evident - all around.

In terms of construction equipment sales, India has maintained the same level of about 180,000 units sold

bauma CONEXPO INDIA

31 Jan-3 Feb 2023:

• 601 exhibitors from 26 countries

• 41,108 trade visitors from 83 countries

since 2017, but this is projected to grow by 5% in the coming years, better than several other countries of the developing world (Figs 2 and 3).

In his speech, Minister Gadkari said: “We have the highest pool of talented technicians in the world and a young aspiring work force. We must train them and put that talent and labour force to good use.” He went on to list projects in India tasked with converting construction equipment from diesel fuel to greener alternatives including LNG, electric power, ethanol, and hydrogen fuel made from biomass. “Make this transition for yourselves,” he warned the equipment manufacturers, “or we will impose a 50% increase on GST tax on making diesel vehicles”. He warned also on the construction industry’s need to “reduce air, water and sound pollution” and to “reduce the cost of construction by improving productivity and without lowering quality. Big challenges,” he said, “but not impossible.”

India’s 1.3 billion-plus population, soon to overtake China, at 1.4 billion, to be the country with the largest population in the world, is often considered a drawback. Not so for the Modi Government. “Along with agriculture, construction is entry level into the economy for the unskilled. We need them and we have a duty to them to train them for safe construction work,” said Nath of VDMA India. Training of the construction workforce could not be a more urgent requirement, as Minister Gadkari explained: “We are short by more than 22 lakh truck drivers in the country and suffer more than 1.5 lakh (150,000) road deaths per year. There are no driving schools and truck drivers are being asked to work for 12-16 hours per day. My challenge to equipment manufacturers is to train construction employees. Give them a certificate of proficiency and the Government will recognise it.” This later point is an important promise since minimum wages in India,

starting at 178 rupees (US$2.16) per day, are regulated by skill levels. Safety regulations, workers compensation for injuries, family insurance plans for construction worker fatalities, and occupational health standards and regulations, including minimum work hours/day for truck drivers, are all areas of construction labour force welfare that require Government and industry attention.

Doing business at the show

Among the exhibitors at bC India, there were major suppliers to the Indian tunnelling industry and represented by their agents, including Palmieri, Normet, Häny, Schauenburg ventilation systems, and others, as well as four of the principal TBM manufacturers – in Hall 10 Terratec and CRCHI on its agent Friends Equipment stand; Robbins in Hall 14; and Herrenknecht in Hall 15.

While on the Terratec stand, Amit Thakur, Senior ManagerBusiness Development, explained that all excavation on the Mumbai Metro Line 3 project is complete and “more than 100 TBMs of the 6m diameter plus range will be needed over the coming two years – and more than 50 TBMs will be working at once during the coming year 2023-2024”. We then listed those he could recall, some already ordered, some already on site, some just launching and the rest up for grabs. These and others are listed in Table 2.

TBMs of large diameter are also being applied to new road and rail projects, a sector of infrastructure development that is expanding rapidly. While visiting the Rocscience stand, Consultant Dr Manoj Verman explained that one of his recent highlight projects was to oversee the site investigation works for the new railway line between Richikesh and Karnaprayag where, of the 125km length, 105km will be in tunnel. Herrenknecht recently completed the factory acceptance text with customer L&T for delivery of the first of two 9m diameter TBMs from the factory in Germany for the 10km long twin tube tunnel of Package 4 of the line.

On visiting the stand of a supplier of drill+blast consumables, Vishal Agarwal, Director of Machino International of Delhi, said that he did not feel the impact of TBMs on the drill+blast market. And to be fair, for the TBM projects listed in Table 2, there are a factor of 10 times or more, the number of drill+blast projects underway and in the pipeline, and while TBMs are coming, to compete with drill+blast in a great way, the drill+blast market is so secure that the number of jumbo manufacturers and those offerings drill+blast support machines and suppliers at the show were conspicuous by their absence.

Disappointingly, for us in the tunnelling industry, new highways and metro line in cities can be seen being extensively on less-expensive, faster-finished elevated structures, something that India may come to regret, as other countries and cities have in the past. A fact that is coming to be increasingly appreciated, is that urban density, the cost of real estate in cities, and a more informed population that is no longer easily bought off in the name of needed infrastructure projects, are influences that are forcing metro and urban road and rail planning underground in India. Intercity highspeed rail links demand their own underground routes to keep the alignments straight and gradients within limits.

To address the call to ‘make in India’, Herrenknecht and Robbins can manufacture TBMs of the metro size and smaller at their factories in Chennai and Delhi respectively, Terratec has a service base in Delhi for its TBMs that come in from China, and CRCHI is planning to open a workshop/ factory in India soon, according to Daniel Yang, Regional Manager-South Asia and Rajeev Kumar, CEO of its agents Friends Equipment. As far as making the components of TBMs in India, perhaps hydraulic and electric motors and other units sourced in India are of the required numbers and quality, but there are no suppliers in India of main bearings of more than 1.5m or so in diameter. The call for these larger diameter bearings is, as yet, too small and large bearings have to be imported.

Doing business internationally

In recognising the potential, most developed countries of the world are looking to strike favourable trading agreements with India. In her presentation, Ms Renita Bhaskar, Minister Counsellor and Head of the European Union trade delegation to India, said there is great potential for agreeing a free trade agreement (FTA) with India. “For the EU, trade from India is a low 2% while for India trade with the EU is third after USA and China at 10.9%. On a wider scale, India’s trading activity is only 1.8% of global trade so it punches a lot below its weight. Previous FTA negotiations, suspended in 2013, were reopened by Prime Minister Modi and EU Commission President Ursula von der Leyen in May 2021.” The aspiration is to liberalise trade between India and the EU; lower or eliminate trade tariffs; resolve long standing market access problems; agree a set of rules for protecting digital and intellectual property and promote and protect direct investment in India. “The negotiations will not be easy, and we are still closer to the beginning than the end of the process,” said Bhaskar, “but the political will is there, there is growing convergence and the signals are positive.”

Attending the 2023 bC India expo where Shri Nitin Gadkari, Minister of Road Transport & Highway was the guest of honour together with Lt Gen Rajeev Chaudhary, Director General of the Border Roads Organisation

2. List of current and planned TBM

projects in India over the next 2-3 years when 50 or more will be in operation simultaneously

there are other TBMs working on hydro and irrigation projects that are yet to complete their tasks

- Herrenknecht - about 3km to go - stuck

Vishugad Hydro - 12.3km SELI Overseas for HCC 1 x 9.8m Terratec double shield - in launch stage - stuck

Parbati Hydro - 31.52km Gammon/CMS JV 1 x Atlas Copco Jarva - almost completed

For India’s infrastructure growth aspirations, there are several other drawbacks. For end users of construction equipment in India, as pointed out by Dimitrov Krishnan, President, Indian Construction Equipment Manufacturers’ Association (ICEMA) and Managing Director, Volvo CE India, a major one is assured cashflow. “Strong funding commitments are required to give construction companies the backing to invest in new equipment,” he said. Infrastructure funding is an issue everywhere, and as many have commented, funding cannot be from the public purse of India alone. Private financing will have to be harnessed to meet India’s infrastructure ambitions, something that is to be developed from a low level of national experience and acceptance currently. “There must also be renewed efforts for timely resolution of disputes,” said Krishnan. Anyone with experience of the legal system in India will know that it is overwhelmed and moves slowly.

Another issue is the number of major infrastructure projects in India held up and delayed by lack of funds from the owners and by intractable disputes. The central Government is said to have established a fund specifically for funding delayed projects and when TunnelTalk managed to ask Minister Gadkari about the fund while on his tour of the exhibition, he replied in true political speak: “There are no delayed projects!” and moved on. This

TunnelTalk references

• Delhi Metro Phase III completes TBM excavation - February 2017

• Slurry vs EPBMs on Bangalore Metro – August 2022

• Mumbai Metro structures, methods and progress - March 2020

• Chinese TBM for Mumbai coastal highway drives - April 2020

• Mega-TBM advantages for AMR in India - January 2009

• Second TBM assembled for Veligonda - July 2009

• Hybrid EPBM for mixed drive at Sleemanabad - May 2011

• India headrace TBMs stuck and needing rescue - April 2021

• Fatal flood hits hydro works in the Himalayas - February 2021

may be expedient in promoting the positive ambitions of the current Government, but it is not facing the reality or scale of the problem. As a News18 media report stated in November 2022, of 1,505 delayed projects with a value of 21.22 lakh crore INR, their anticipated completion cost is 25.93 lakh crore INR. The expenditure incurred on these projects is 13.50 lakh crore which is 52.08% of the anticipated cost and 63.62% of the original cost. The total cost overrun is 4.71 lakh crore Rs or 22.19% of the original project cost. That is, the cost overrun is a waste of taxpayers’ money, as about 62.8% of the allocation for capital expenditure in the budget 2022-23 is for cost overruns.

Doing business at bauma

A snapshot of show activity with statements, opinions

bauma CONEXPO INDIA

31 Jan-3 Feb 2023:

• 601 exhibitors from 26 countries

• 41,108 trade visitors from 83 countries

bC India video reports

• Highlights Day 1

• Highlights Day 2

• Highlights Day 3

“With a projected 100,000 construction equipment units sold in 2023, up from 80,000 units in 2022, the forecast is for a further 10-15% increase in 2024/2025”

Dimitrov Krishnan, President Indian Construction Equipment Manufacturers’ Association (ICEMA) and Managing Director, Volvo CE India

“India is an important market for us through our agents A & A International, and has been since the 1980s”

Patrizia Pierallini International Sales Executive, Palmieri

“The first CRCHI TBM in India was the 12.2m diameter machine for the Mumbai coastal road phase 1 in 2019 and we have 14 more for metro projects”

Rajeev Kumar CEO Friends

Equipment, and agent in India

for

CRCHI

“Captains of construction are the true Arvind Garg, Chairman, Senior Executive Vice President & Mining Machinery

Hydropower represents about in India with about 28,000MW developed, and only 2% of that 45% of the potential. Developing hydro to the aspiration of 40%

“We take our lead from the head office in Germany and compete in the India market on our own terms”

Manoj Garg Managing Director, Herrenknecht India

bauma conexpo India 2023

opinions and information gathered from the exhibitor stands

Road construction statistics: In September/ October 2022, India was building 32km of new roadways/day, up from an average of 20km/day and the aspiration is to increase that to 100km/day

construction companies national builders”

Chairman, bauma CONEXPO INDIA President & Head Construction Business, Larsen & Toubro

“Terratec has been in India since 2008 and has supplied more than 40 TBMs for projects in India since then, including seven machines to Mumbai Metro Line 3, more than any other manufacturer”

Amit Thakur, Senior Manager, Business Development, Terratec India

“Construction is the highest source of GST (goods and sales tax) revenue to the Government”

Shri Nitin Gadkari Minister of Road Transport & Highway

about 25% of the power generation 28,000MW of a potential 84,000MW that in the Himalayas which hold Developing this will be required to bring 40% of power generation in India.

There are 110 road tunnels operating in India with a total length of 195km

“Ten cities are planning to start building metro systems in the next two years. Current demand for TBMs is high”

Kapil Bhati Managing Director, Robbins India

“India is our largest market outside of China”

Daniel Yang Regional Manager, South Asia, CRCHI

Another hardly spoken of drawback is the omnipresent practice of corruption in India. EU Counsellor Bhaskar mentioned it only once, and in passing, in her address and there was audience applause when Minister Gadkari said that “corruption must reduce”. India ranks 85 of 180 countries on the current Transparency International Corruption Perceptions Index (CPI) with Denmark, Finland and New Zealand in the top three places and Somalia, Sudan and Syria at the bottom. More must be done to outlaw this scourge at all levels of society, not only in India but everywhere in the world.

But for the moment, it is the good news narrative that is being pushed in India, as well it might. Next year, 2024, is a national election year for central and state Governments. In the poll, Prime Minister Modi and his ruling BJP party will be seeking a third five-year term, and much is being invested in the populist themes of Mr Modi and his Government’s agenda. Across India, you will see images of the Prime Minister rallying self-belief. In these messages, he and his ministers - successfully it appears - have put the colonial past behind them and are asking the nation to believe that India’s destiny is now in its own hands and that it can no longer blame anyone else for its present and future. That self-belief is fundamental for nation building. n

TunnelTalk references

• Video: bauma CONEXPO India 2018 report

• India, a reluctant powerhouse - December 2016

• Rohtang pushed NATM to the limits - January 2021

• Chennai Metro announces surprise award - March 2011

• bC India impresses with premiere show - February 2011

• bauma 2010 partner country India - April 2010

• ITA 2008 news from Agra, India - September 2008

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