Coal Mining Privatization in India Can Benefit Auto-Industry

Coal Mining Privatization will bring mid-term results for the auto industry: Coal Mining was hitherto the monopoly, and the government has leaped forward to relax Foreign Direct Investment, and the repercussions are being looked forward. The Indian government has made an invigorated move of the removal of the monopoly of Maharatna PSU Coal India Ltd. This is expected to attract more foreign investments to the sector and boost the output. Heavy-duty trucks and dumper segments are an integral part of the mining activities, but short term results are not seen through coal mining is privatized.

Trucks and mining equipment will come into the picture once the auction of coal mines takes place, and the demand gets generated. The auction of coal mines will take 4-5 months as the policies have to be immaculate for the foreign companies to come forward for investment.

Foreign players are already in the anxiety one owing to frequent policy changes in the country and the likelihood of repercussions. The full swing operation of mines will take another two months, which means at least seven months, the silent period continues. No immediate benefits can be seen in this.

"The center's decision to privatizing the mining activities will open up many ways to explore mining activities, and this, in turn, will create more demand. For any mining activity mining equipment, the heavy-duty truck is used in deep mining, light mining, and transportation of mining materials. We are in the latter two activities. Our Blazo trucks are well suited for light mining up to a 60-meter depth and for the movement of mining materials," said Vinod Sahay, CEO, Mahindra Truck and Bus and Construction Equipment.

A substantial chunk of deep mining activities is carried out by premium heavy-duty trucks where the range is available only with foreign players like Volvo and Scania, with a very high market share. The domestic players like Tata Motors and Ashok Leyland do not have the range satiating the demand. Also, the life of the trucks used in mining would be between 3-4 years, which will generate huge seamless demand. Better if the homegrown players sense the intrinsic demand and gear up for the same.