Global trade barriers creating opportunities for India: Larsen & Toubro

On expectations from the upcoming Union Budget, L&T's Whole Time Director and CFO R Shankar Raman said the government does not have enough resources to meet its plans for public spending.

Mumbai: The current geopolitical scenario and the global trade barriers are creating opportunities for India and the government needs to encash this opportunity, a senior Larsen & Toubro official said. Acknowledging that the general slowdown in the economy has impacted the construction sector in India, L&T's Whole Time Director and CFO R Shankar Raman said that the government also needs to create an environment for multilateral, with huge development budgets, to invest in India.

"The trade barriers that are happening globally are creating opportunities for countries like us provided we are willing to encash. This will be a window which could soon disappear," Raman told reporters after announcing the company's quarterly performance.

He said that multilaterals have a lot of developmental budgets available for spending and we are seeing a lot of Japanese credit coming in and few others also investing.
"The FDI numbers have gone up. There are people who want to take call on India. What the government has to do is to create an environment which will make them feel comfortable for lending as well as investing. I think government can address some of these issues and industry can respond by moving forward," Raman added.

He further noted that the economic agenda is coming to the front burner from the back burner for the first time in the current year. "There have been a lot of political distractions. There have also been extensive industry consultations at various levels in the government and there is seriousness to revival. What is ailing us is soft consumption as there are no jobs that are getting created which has led to discretionary spends to be put on hold. If growth has to come back, if investment has to happen, it's important that consumption has to happen," Raman added.

He also noted that it will take a year and year-and-half from now for things to fall in place and the situation to improve.

Company's managing director and CEO SN Subrahmanyan said that government should speed up the pace big ticket size projects and ensure they are not stuck.

"There are big ticket size projects announced like the river interlinking, road expansions, the high speed corridor, among others which are moving slowly. We do expect these to pick up as this situation cannot prevail long. There are various disputes and arbitrations which are now getting sorted out," he said.

Subrahmanyan also said that stretched balance sheets among their competitors sometimes has placed the company in the position of being the sole bidder for major infrastructure projects.

"There are orders where L&T is the single bidder and hence, we have to bid in 2-3 rounds to win projects. In certain government projects, L&T's pricing is below the government's budget. In such cases, the government has cut the scope of the projects to meet their budget constraints," he added.

On expectations from the upcoming Union Budget, Raman said the government does not have enough resources to meet its plans for public spending.

"The government is not scaling down its plan but is struggling to figure out a way to meet the plans. So lead indicators from the budget may be some slippages in fiscal in the larger interest of economic growth, the financial responsibility mandate that they cast upon themselves can get more flexible in implementation. The other will be how much money they will borrow," Raman added.