Indian Construction Equipment Industry Sees Export Growth Despite FY2026 Sales Dip

The Indian construction equipment industry recorded a marginal decline in overall sales during FY2025-26 as slower infrastructure execution and delays in project implementation impacted domestic demand. According to the Indian Construction Equipment Manufacturers’ Association (ICEMA), total equipment sales declined by nearly 2 per cent year-on-year to 1,36,995 units in FY26 compared to 1,40,191 units in FY25. Despite weaker domestic demand, the industry maintained its position as the world’s third-largest construction equipment market, supported by robust export growth and ongoing investments in manufacturing capabilities.

Domestic demand excluding non-OEM exports declined by around 7 per cent across several equipment categories during the financial year. The slowdown was linked to delayed project awards, slower execution of major infrastructure projects and challenges in land acquisition. However, exports emerged as a major growth contributor for the sector, rising by approximately 32 per cent during FY26 and reaching record levels across major equipment segments. Industry stakeholders indicated that Indian manufacturers continued to improve global competitiveness through cost advantages, localisation efforts and compliance with international emission standards.

Construction Equipment Sales Performance Across Segments

Earthmoving equipment continued to dominate the Indian construction equipment industry during FY26 with a market share of around 71 per cent. While some equipment categories experienced declines, road construction and material processing equipment reported moderate growth during the year. Domestic manufacturing also remained strong, with over 95 per cent of equipment sold in India being locally produced.

FY2026 Segment-Wise Construction Equipment Sales

Industry executives stated that the decline in equipment demand should be viewed in the context of slower infrastructure execution rather than any long-term structural weakness. Delays in contractor payments, moderation in the implementation of the Jal Jeevan Mission and reduced pace of national highway construction also affected equipment utilisation and fresh procurement activity. Additionally, higher equipment costs following the implementation of CEV Stage V emission norms from January 2025 added pressure on purchasing decisions across several customer categories.

Export Growth Strengthens Industry Outlook

Exports provided significant support to the Indian construction equipment industry during FY26. Improved manufacturing quality, competitive pricing and compliance with global emission standards enabled Indian manufacturers to expand their presence in overseas markets. The increase in exports also reflected growing international acceptance of India-manufactured construction equipment across earthmoving, material handling and concrete equipment categories. Imports into India increased by approximately 17 per cent during the year, mainly in specialised equipment segments.

According to industry leaders, the underlying long-term demand outlook for construction equipment remains positive as infrastructure investments continue across highways, railways, freight corridors and logistics projects. The government’s public capital expenditure allocation of ₹12.2 lakh crore for FY27 is expected to support future demand recovery as execution activity accelerates and project awarding gains momentum across infrastructure sectors.

Budget Measures To Support Local Manufacturing

The Union Budget 2026-27 introduced measures aimed at strengthening localisation within the construction and infrastructure equipment sector. Indian industry bodies highlighted the announcement of a dedicated incentive scheme designed to support local production of critical components such as hydraulics, engines, transmission systems and undercarriage parts. The initiative is expected to reduce dependency on imports and improve supply chain resilience for domestic manufacturers.

Industry participants also expect investments in railways, waterways, coastal cargo infrastructure and logistics corridors to generate fresh opportunities for equipment manufacturers over the coming years. As infrastructure execution improves and delayed projects resume, the sector is anticipated to return to a stronger growth trajectory supported by localisation initiatives, export expansion and continued government infrastructure spending.

Frequently Asked Questions

Why did the Indian construction equipment industry report lower sales in FY2026?
The Indian construction equipment industry reported lower sales in FY2026 mainly because of slower infrastructure execution and delays in project implementation. Factors such as delayed land acquisition, slower highway construction activity, delayed contractor payments and rising equipment costs impacted domestic demand during the year. Industry experts noted that the slowdown reflected temporary execution-related challenges rather than structural weakness. Despite weaker local demand, exports recorded strong growth and supported overall industry resilience throughout the financial year.

Which segment dominated the Indian construction equipment market in FY2026?
Earthmoving equipment remained the largest segment in the Indian construction equipment market during FY2026. The segment accounted for around 71 per cent of total market share with sales of 97,236 units during the financial year. Although sales in the category declined slightly compared to FY25, earthmoving equipment continued to lead the market due to strong demand from infrastructure and construction activities. The segment also benefited from domestic manufacturing capabilities and growing export opportunities for Indian-made equipment.

How did exports contribute to the Indian construction equipment industry in FY2026?
Exports played a major role in supporting the Indian construction equipment industry during FY2026 as overseas shipments increased by approximately 32 per cent year-on-year. Indian manufacturers benefited from improved production capabilities, competitive pricing and compliance with global emission standards after the adoption of CEV Stage V norms. The strong export performance helped offset weaker domestic demand and demonstrated the increasing global competitiveness of Indian-manufactured construction equipment across several major equipment categories and international markets.

What government measures are expected to support future construction equipment demand?
The government introduced several measures in the Union Budget 2026-27 to support future construction equipment demand and localisation efforts. These include a dedicated incentive scheme for the construction and infrastructure equipment sector and increased public capital expenditure allocation of ₹12.2 lakh crore for FY27. Investments in freight corridors, railways, waterways and coastal cargo infrastructure are also expected to generate long-term demand for construction equipment manufacturers as project execution activity improves across India.