Amid challenges of slower infra execution and dip in domestic equipment demand in the wake of higher prices resulting from escalated logistics and component  costs following the West Asia war and tighter  global emission and safety norms, coupled with expensive financing, Indian construction equipment manufacturers are looking to tide over these short term cyclic setbacks with higher exports,  in order to attain sustainable growth ahead.  

Vinod Behl

The construction equipment industry entered FY27 on a moderate note amid 6.7% contraction in domestic demand with a broader  retail sales contraction of 11..7%, though exports surged almost 32%. Highway construction pace suffered on account of bottlenecks related to land acquisition, slowdown in central fund disbursement and equipment funding issues. The pace of highway construction came down from  33.8 km per day in FY 24 to 29.2 km per day in FY 25. Total highway construction came down to 9380 km in FY26, from 10660 km in FY25, lowest in seven years. 

According to Shalabh Chaturvedi, VP, Indian Construction Equipment Manufacturers Association and Managing Director, India & SAARC, CASE Construction Equipment, FY27 faces  growth risks with higher input costs due to rising steel and bitumen prices,  supply chain disruption amid ongoing West Asia war and slow execution of infrastructure projects.Overall, the sector is expected to see single digit growth in FY27.  

There is however a silver lining as FY 27 Q1 sales statistics of construction equipment are encouraging. During this period, construction equipment sales registered 11% YoY increase   overcoming cyclic slowdown of FY26.The dual negative impact of elevated equipment costs and higher financing costs presents an opportunity for equipment manufacturers . It could well prove to be a blessing in disguise for the rental and used equipment market, particularly aiding small contractors doing short duration projects.

There is a positive outlook on the export front too , particularly as despite slowdown in FY26, construction equipment exports surged 31.5%. On a positive note, Indian equipment manufacturers are gaining tech capabilities, with competitive pricing to gain further foothold in emerging import-dependent markets of South-East Asia, Middle-East, South Africa, Latin America and even Europe. But considering the unending geopolitical disruptions, equipment manufacturers need to gear up to meet the challenge of market diversification as a credible alternative to China.

Our manufacturing and export strategy should ensure transition from Make in India for the domestic market to Make for the World to   leverage global market demand. Our immediate focus should be on mid-end value for money equipment , rather than high-end advanced equipment market dominated by the likes of the US and Japan. Indian construction equipment is suited for emerging overseas markets  as it is tech-savvy, rugged -suiting rough dusty  terrain and high temperatures, besides offering value-for-money. 

Construction equipment including backbone loaders, asphalt pavers, compactors/rollers, wheel loaders, cranes , mining equipment, material handles, electric compact equipment, and crawler excavators have export potential. India’s  expertise in highway construction, will serve as a major domestic and global  driver of road construction equipment like motor graders, soil compactors, asphalt  and concrete pavers, milling machine, vibratory rollers and road recycling equipment. 

The long-term story for India, world’s third largest construction equipment market , remains positive  with strong structural demand amid massive investment in highways, railways, airports, ports, industrial corridors and overall urban infra.  Considering the future demand dynamics, the Indian construction equipment market  is poised for a major transformation  in the coming years , moving from consumption market to a global manufacturing and export market amid localisation , achieving scale to manufacture globally competitive products. The future road to growth lies in transitioning from cyclical growth to structural growth  and moving from conventional equipment to increasingly intelligent and sophisticated equipment to meet global standards.