Indian Mining & Construction Equipment Industry Growth Slows to 3%: ICRA

The Indian Mining and Construction Equipment (MCE) industry experienced a 3% YoY growth in FY2025, compared to 26% in FY2024 and FY2023. The slowdown is attributed to reduced domestic project award activity and execution momentum, influenced by the General Elections and extended monsoon-related impediments.

Export momentum also tapered during the same period. ICRA anticipates a modest 2-5% YoY growth for MCE industry volumes in FY2026, with sales exceeding 1 lakh units for three consecutive years. The sector’s reliance on financing, with 85-90% of MCEs sold in India being financed, highlights the impact of tight liquidity with Non.

Banking Financial Companies (NBFCs). The industry’s stable outlook is supported by expectations of continued government emphasis on infrastructure development and favorable commodity prices. FY2026 volumes are projected to grow moderately by 2-5%, with potential upside contingent on a timely recovery accelerated project execution, and a surge in exports.

The Indian mining and construction equipment (MCE) industry has experienced a slowdown in growth, registering just a 3% increase in the latest fiscal year, according to a recent report by credit rating agency ICRA. This marks a significant deceleration compared to previous years, where double-digit growth was observed.

Factors Contributing to the Slowdown

Several key elements have contributed to the sluggish growth of the MCE industry The slowdown is attributed to multiple factors, including economic uncertainties, policy changes, and fluctuating demand in key sectors The initiatives, such as road construction and metro rail projects, has impacted the demand for construction equipment.

Industry experts believe that while short-term growth has slowed, long-term prospects for the MCE sector remain positive. Factors such as coal and mineral production will likely support industry growth. However, challenges such as global economic headwinds.

The Indian mining and construction equipment industry’s growth slowdown to 3% reflects the current economic and sectoral challenges. While government initiatives and infrastructure investments provide optimism for the future, overcoming supply chain issues, regulatory bottlenecks, and financing constraints will be crucial for sustained growth in the coming years.

1. Slowdown in Infrastructure Projects:
2. Mining Sector Challenges: Regulatory hurdles, fluctuating commodity prices, and environmental concerns have slowed mining activities, leading to reduced demand for heavy machinery Rising input costs, particularly for steel and other raw materials, have increased the prices of construction and mining equipment, impacting purchasing decisions.
4. Supply Chain Disruptions: Global supply chain constraints, including semiconductor shortages, have affected equipment availability and delayed project timelines Tighter financing conditions and higher interest rates have made it challenging for small and mid-sized contractors to invest in new equipment The performance of different segments within the MCE industry has been mixed.
6. Earthmoving Equipment: Demand for excavators and loaders has remained stable, driven by road and urban development projects, but growth has been muted due to overall economic uncertainty The demand for dump trucks, drills, and dozers has witnessed a slowdown due to regulatory challenges and reduced mining activity The segment, and forklifts, has seen moderate growth due to the expansion of warehousing and logistics infrastructure.

• Concrete Equipment: Demand for concrete mixers and batching plants has weakened, aligning with the slowdown in real estate and commercial construction Despite the slowdown, the Indian government remains committed to infrastructure development through initiatives such as A long-term investment plan aimed at boosting infrastructure spending and reviving demand for construction equipment.
• Mining Sector Reforms: Policy changes, including auction-based mining leases and increased private sector participation, are expected to drive long-term growth in mining equipment sales Encouraging domestic manufacturing of construction and mining equipment to reduce dependency on imports and improve cost competitiveness.

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