The Indian construction equipment (CE) market, seen as the third-largest globally, is now valued at $10 billion. With consistent government investments and a strong focus on technological innovations, the CE sector is playing a crucial role in building the country’s infrastructure and driving economic growth.
Current scenario and growth drivers
In recent years, the CE market has embarked on a strong growth trajectory, primarily driven by the government’s continuous thrust on infrastructure development. Significant budgetary allocations for flagship construction programmes including Bharatmala and Sagarmala Pariyojana, Pradhan Mantri Gram Sadak Yojana (PMGSY), Pradhan Mantri Awas Yojana (PMAY) and the Smart Cities Mission, along with increased mining activities, have been key drivers for the CE market.
Over the years, the sustained focus on infrastructure development has led to a sharp rise in CE sales, reaching record-high levels in 2023-24. During this period, the sector recorded a robust growth, with a 26 per cent increase in sales volumes, reaching 135,650 units, compared to 107,779 units sold in 2022-23. This growth has been fuelled further by the increased construction pace during the pre-election period.
The trend has reversed in 2024-25, with dampening of the demand for new equipment. Due to the implementation of the Model Code of Conduct and subdued project awarding and construction activity, the growth trajectory of CE sales was hindered in the first quarter. Additionally, an extended monsoon in some parts of the country further impacted the slowdown in the second quarter (Q2). Subsequently, the CE industry recorded a year-on-year growth of only 3 per cent, reaching 59,588 units in the first half of 2024-25, compared to the same period in 2023-24.
The CE market relies heavily on road construction, which contributes 35-45 per cent of CE sales in India, followed by mining (20-30 per cent), real estate (10-20 per cent) and other sectors such as railways, water supply and power. Furthermore, the road sector generates maximum demand, particularly for earthmoving equipment, which accounts for 70 per cent of the CE sales volume.
The road project awards remained weak for most part of 2024-25, impacting equipment sales. However, the mining sector provided some support to the industry, driven by increased energy demand. For instance, the coal production grew by 6.11 per cent to 726.29 mt (provisional) in 2024-25 (till December 2024) compared to 684.45 mt achieved during the previous financial year, showing an increase in the mining activity.
Equipment-wise sales performance
The CE sales numbers of the first half of 2024-25 highlight the challenges in the current market scenario, resulting in subdued growth across CE segments. The equipment used for construction is broadly segregated into five segments – earthmoving equipment (70 per cent share of the total volume), material handling equipment (14 per cent), concrete equipment (11 per cent) and road construction and material processing equipment (5 per cent).
Segment-wise year-on-year comparison reveals that the demand for earthmoving equipment increased by only 6 per cent in the first half of 2024-25, a sharp decline from the 21 per cent growth recorded in the previous fiscal. The road construction and concrete equipment segments experienced a modest growth of around 4 per cent and 1 per cent, respectively. However, the material handling equipment segment took a hit, with an 11 per cent decline in sales, while the material processing equipment segment contracted by 2 per cent.
On a quarter-on-quarter basis, sales performance showed an overall increase of 6 per cent in Q2 2024-25 to 30,686 units, from 28,902 units in Q1 2024-25. This growth is primarily driven by a nearly 10 per cent rise in earthmoving equipment sales, which reached 21,930 units compared to sales in the previous quarter. However, the road construction equipment segment recorded the steepest decline, dropping sales by approximately 8 per cent to 1,339 units.
Regulatory support
In line with its “Atmanirbhar Bharat” vision and Make in India agenda, the centre launched a production-linked incentive (PLI) scheme in 2023, with a substantial capital outlay of Rs 1.97 trillion.
Although the CE industry was not included in the initial list of sectors eligible for PLI incentives, several related industries such as electronic components, automobiles and auto components, speciality steel and
electronic/technology products, received those benefits.
In recent years, sustainability and pollution control have become critical focus areas for the government. As a result, it has also brought significant changes to the regulatory landscape for CE manufacturers. One such recent transformative step is the implementation of CEV Stage V emission norms from January 2025. With this move, India has become the third country after the US and the EU to adopt these modern emission standards. The new regulation applies to wheeled CEVs, which account for around 65-70 per cent of the country’s market.
Further, the Ministry of Roads, Transport and Highways (MoRTH) has proposed new rules, requiring all electric construction vehicles, including dumpers and excavators, to comply with strict safety standards. The amendment introduces a new rule, 125-O, which mandates compliance with Automotive Industry Standards (AIS)-174, focusing on battery safety, electrical systems and the overall vehicle design.
While these regulatory changes will increase equipment costs, they are expected to deliver long-term benefits. Vehicles complying with higher standards will not only gain a competitive edge in global markets but also promote climate-conscious practices, aligning the industry with global sustainability goals.
Focus on sustainability and technology
The focus on sustainability and eco-friendly construction methods is gaining traction, with even niche sectors such as equipment manufacturing embracing green initiatives. This is paving the way for a transition towards electric and hybrid equipment. Recognising this trend, manufacturers are tapping this emerging opportunity in this new segment.
In September 2024, Kobelco Construction Equipment India launched SK80, an Indian-made 8-tonne category excavator with advanced technology and a hydraulic system. Meanwhile, in August 2024, Godrej & Boyce introduced the country’s first lithium-ion battery-powered forklift trucks, featuring an indigenously developed battery management system. Further, Case Construction Equipment launched its first electric vehicle (EV) products in 2023 – the CX15EV mini excavator and the SL22EV small articulated loader. Subsequently, it launched 580EV, the industry’s first purpose-built electric backhoe loader. Driving innovation further, in 2023, JCB unveiled a backhoe loader powered by a hydrogen combustion engine.
The compact CE market is gaining momentum globally, driven by its unique advantages. Features such as ease of operation, cost-effectiveness, versatility with attachments and efficiency in operating within confined urban spaces have led to growing interest in this emerging segment. According to industry reports, compact CE is projected to reach $89.4 billion by 2032, experiencing a compound annual growth rate of around 4.1 per cent between 2024-32. India is a rapidly urbanising economy, with the potential to emerge as a crucial market for this segment.
Meanwhile, the transition in the construction industry towards greener practices extends beyond CE. The adoption of alternative, sustainable materials has been on the rise, with modified bitumen, plastic waste, eco-friendly concrete, geosynthetics and fly ash increasingly used for road construction. Green cement and steel are also seeing a wider adoption.
Future outlook
The CE industry, after experiencing a brief slowdown in its growth trajectory, is anticipated to witness a revival in growth. The industry is expected to recover, as the project awarding activity regains momentum and the construction work picks up pace. While demand from other sectors such as mining and housing may offer some support, it will only partially offset the gap until the pace of road construction sees a revival. In addition, the government has introduced multiple initiatives for rural development, which are expected to continue to support CE demand; for instance, the launch of PMAY-U 2.0 in September 2024 and the approval for PMGSY-IV during the same month with a capital outlay of Rs 70 billion.
Projections by the Indian Construction Equipment Manufacturers Association indicate that the market is set to achieve a $25 billion market size by 2030. Driven by a consistent focus on infrastructure development, the CE industry is set to be a major beneficiary. Additionally, with technological advancements and alignment with global sustainability standards, the Indian CE is making a mark on the global stage. Exports have witnessed a robust growth of approximately 80 per cent, rising from 3,448 units in the first half of 2022-23 to 6,186 units in the same period in 2024-25.
