Q&A with AGGCON on India’s new budget

AGGCON is active in India’s infrastructure and construction market through the rental of cranes, piling equipment, concrete pumps and road building equipment. Based in Faridabad on the outskirts of New Delhi in northern India, the company has been active since 2003 and employs more than 600 people.

Jitender Aggarwal, founder and chairman of Indian rental company AGGCON. (Photo: IRN)

IRN: Our first question is to ask about the main thrust of the government budget and how will it impact the rental business?
Jitender Aggarwal: In Prime Minister Narendra Modi’s third term, government has assured that it would continue with the reforms and focus on infrastructure development and would work with three times the speed. This is encouraging and is expected to pave a way for faster growth for the infrastructure equipment rental industry.

Further, the Prime Minister’s mission - Viksit Bharat 2047 - will drive the infrastructure development of India. It is also estimated that by 2047, 51% of India’s population is likely to be living in urban centres. So, urbanisation is expected to happen at a faster pace, creating a demand for urban housing and infrastructure.

In the 2024 Budget, government has made it clear that infrastructure is a priority sector by allocating ₹11,11,111 crore [€124 billion] for capital expenditure, which is 3.4% of GDP, and said it will maintain strong fiscal support for infrastructure over the next five years, while balancing other priorities and fiscal consolidation.

The Economic Survey 2024 too suggested that a higher level of private sector financing and resource mobilisation from new sources will be crucial for infrastructure and it underlined the requirement for policy and institutional support from central, state and local governments.

In which areas of infrastructure will there be the greatest investment?
The Budget 2024-25 focuses on employment, skilling, micro, small and medium enterprises, and the middle class, and has listed nine sectors as a priority that include infrastructure, energy security and urban development.

Economists have said the investments in renewable energy and roads will drive India’s infrastructure growth, paving the way for sustainable development. Also, as already said, with the rise in urban population, urbanisation is expected to happen at a faster pace, creating a demand for housing and related infrastructure.

Will renewable energy be a big focus - wind, solar? Will this benefit the rental industry?
There are two goals that India has set regarding renewable energy. First, India has set itself a target of becoming a net-zero emissions nation by 2070 and second, a target of achieving 50% of cumulative installed power generation capacity from non-fossil fuel sources by 2030.

Hence, government is continuously focussing on the renewable energy sector. Government is also specially promoting wind power projects across the entire country through private sector investment by providing various fiscal and financial incentives. The government has also recently introduced viability gap funding (VGF) for offshore wind energy projects.

A Liugong excavator pictured in March 2024 working on the site of the Dholera International Airport in the western state of Gujarat, India. (Photo: Reuters/ Amit Dave)

Therefore, there are good opportunities for rental industry in WTG (wind turbine generator) installations in both ways – through rental of equipment and as EPC [complete build] projects.

Will the new budget have an impact on your plans for the business? Will you accelerate your investment in certain types of equipment, and will you open new rental locations? Are there any new types of products that you will invest in?
The focus on infrastructure and the Rs ₹11 lakh cr [€1214 billion] allocation for it is vital for India’s economic growth. Moreover, government assurance that it would maintain strong fiscal support for infrastructure over the next five years, will give impetus to the ongoing infrastructure projects and future projects.

This is encouraging for the growth of the infrastructure sector and consequently a boost in the growth of infrastructure equipment rental industry.

For next five years, we are focusing on the expansion of our fleet on a large scale, considering the need for specialised equipment and new infrastructure projects in the current tenure of PM Narendra Modi.

We are planning to enhance our presence internationally, exploring opportunities with the Global Rental Alliance (GRA) [the umbrella organisation for rental associations around the world] and prominent rental companies worldwide to explore business opportunities.

The budget will impact government/public projects, but what about private investment in commercial facilities (warehouses, data centres etc), is this also increasing?
Government has said it will maintain strong fiscal support for infrastructure over the next five years, while balancing other priorities and fiscal consolidation. The Economic Survey 2024 also suggested that a higher level of private sector financing and resource mobilisation from new sources will be crucial for infrastructure and it underlined the requirement for policy and institutional support from the central, state and local governments.

What is the current level of demand for equipment in India? Is the market over-heating, or at a healthy level? How long do you think this positive business environment will last in India?
Owing to government’s focus on infrastructure and ongoing projects, the demand for equipments is increasing.

Irrespective of which government, the positive business environment will continue. The current government has raised the benchmark as far as infrastructure is concerned. And Prime Minister Narendra Modi’s mission of Viksit Bharat 2047 will keep setting a positive environment for future.

AGGCON has been investing in its heavy lift crane fleet, including this XCMG XLC250 crane. (Photo: Aggcon)

Do you expect to see other rental companies from outside of India entering the market?
The entry of international rental companies will be beneficial for the rental market as this will bring international standards to Indian market, for both rental companies and contractors. This will help Indian rental companies to explore international markets too.

Is there anything else that you think it is important to mention?
The government of India should review the policy of awarding the contracts to L1 [the lowest bidders] as many times the L1 companies quote their prices far below the cost of projects as calculated by the government departments.

Government should understand the viability of projects from L1 contractors at such low prices, as this can compromise the quality of work.

Aggcon invests in heavy lift crane fleet Indian rental company expands its rental fleet with XCMG machines