IT And Automobile Sectors Found Difficult To Raise Funds - Jan 9, 2009

The sectors such as construction, IT and automobile, during the April-November period this fiscal found it difficult to raise funds from overseas on account of financial meltdown, says a study.

The External Commercial Borrowings (ECB) by the industry during April-November 2008 fell steeply by 35.74 per cent to USD 13.78 bn as compared to USD 21.45 bn in the same period of 200, the study by industry body Assocham said. The Construction, IT, steel, aviation and automobile sectors, which were among the top ECB raisers in the first eight months of 2007, have registered the steepest fall in the same period of 2008 as global liquidity pressure along with the recession in the developed countries and domestic demand slowdown took toll on the fund raising capacity of the Indian industry, it said. The study said, among the sectors that recorded maximum dip in ECBs in 2008 include construction (97.34), IT (95.5 per cent), steel (91.63 per cent), aviation (86 per cent), automobile and automobile components (78 per cent).

However, 36 sectors have recorded decline in ECBs out of the 51 sectors tracked by the study. The number of companies going for the offshore borrowing route has slipped by 19.5 per cent to 345 for the eight-month period as against 429 in the same period last fiscal.

Govt To Set Up Regulator For Construction Industry

NEW DELHI: The government is planning to set up a regulator for construction industry. Apart from facilitating single-window clearance for construction industry hitherto swamped in multiplicity of regulations and licences, it would also make mandatory for every state government to levy worker welfare cess on construction industry.

The model regulation would also propose a quick redressal mechanism for construction industry which is always faced with littany and disputes. The department of industrial policy and promotion (DIPP) is taking up the proposal with concerned ministries for framing the policy.

“The proposed regulator would help eliminate anomalies in the existing legal system which come across owing to multiplicity of authorities and procedural complexities,” a senior government official said.

The proposal was, in fact, put in the last National Development Council’s meeting on 11th Five-Year Plan. “Once the proposal gets approved, the government would enact a legislation to this effect,” the official said. “A model construction law may help bring together best of the points from national as well as the states,” he added.

At present, companies engaged in a construction require registration under five laws, apart from obtaining licenses under several Acts and being subject to inspection under 12 laws. The unified law would club all laws under a single umbrella.

Construction sector is key to the growth of physical infrastructure in the country. Moreover, the industry’s contribution to GDP during last year has also grown to Rs 1,96,555 crore. The new model law would also allow setting up of state construction authorities for dispute resolution and arbitration thereby reducing cost and time taken for various lengthy arbitration processes.

Apart from setting safety standards, the new policy would also stress on vocational training and skill upgradation of specify safety standards for workers as art of extending social benefits. It would be made mandatory in every state to levy worker welfare cess on the construction industry. The cess would be in the range of 1-2% on the cost of construction.

According to a survey conducted in 2001 by Construction Industry Development Council, the amount of capital blocked in construction sector disputes was over Rs 54,000 crore.