The Indian construction equipment (CE) sector has recorded a slight year-on-year growth of three percent in FY25, with total equipment sales amounting to 1,40,191 units, an increase from 1,35,650 units in FY24, as reported by the Indian Construction Equipment Manufacturers’ Association (ICEMA).
In FY24, the CE sector experienced a year-on-year growth of 26 percent. In the current fiscal year, although the growth in the domestic market was modest at 2.7%, the overall performance of the industry improved due to a notable 10% increase in exports. “The year 2024, being an election year, was a significant factor contributing to the overall decline in growth. This situation resulted in delays and pauses in the approval of tenders and the implementation of new investments.
Additionally, the elections in Maharashtra also affected the demand within the CE sector,” stated V. Vivekanand, president of ICEMA and managing director of Caterpillar India.
Another factor is the implementation of stage V emission standards for construction equipment vehicles (CEVs), which will take effect on January 1, 2025. These standards are mandated by the Ministry of Road Transport and Highways (India) and are applicable to all wheeled construction machinery equipped with diesel engines, including backhoe loaders, telehandlers, loaders, and compactors.
“The adaptation to these standards has also contributed to a slowdown in Q4 FY25,” stated Vivekanand. The tightening of the financing environment and challenges in sourcing components from countries such as China and South Korea have also adversely affected the overall industry in FY25.
Deepak Shetty, the president designate of ICEMA and CEO & managing director of JCB India, remarked, “The growth could have certainly been higher than initially anticipated earlier in the year; however, as an industry, we remain optimistic about a robust future in the long term. Elections, increasing input costs, and emission regulations have negatively impacted the growth momentum this year.” Vivekanand, on the other hand, contends that the industry has experienced sustained double-digit growth for an extended period, and it is unreasonable to expect this momentum to persist indefinitely, even as we hope for its continuation.
Therefore, if one examines the situation closely, we are not truly witnessing a decline, and there is always a significant baseline effect. Nevertheless, on a positive note, India has emerged as the third-largest construction equipment industry globally. Exports, which were previously minimal, are now experiencing growth, with ICEMA reporting that a majority of exports are now directed towards developed countries.
Looking ahead, ICEMA anticipates a threefold increase in the domestic industry over the next decade, projecting growth from $10 billion in 2025 to $30-35 billion by 2035, while exports are expected to rise from the current $1 billion to $5-6 billion during the same timeframe. The industry was valued at $3 billion in 2015.
Segment-wise performance:
The Earthmoving Equipment segment maintained its leading position with a 71% market share, achieving sales of 99,159 units, reflecting a growth of 6%. Backhoe Loaders were the top performers in this segment, with 53,133 units sold, accounting for a 54% share, followed by Crawler Excavators, which sold 35,816 units, representing a 36% share.
In contrast, the Material Handling Equipment segment experienced a decline of nine percent in FY25, with sales totaling 17,050 units. Meanwhile, the Concrete Equipment segment reported 14,473 units sold, marking a growth of 3%.
The Material Processing Equipment segment recorded 2,507 units sold, experiencing a decline of four percent. The transition of the construction equipment industry towards alternative fuels remains in its early stages. ICEMA believes that progress may be driven by regulatory measures or by making machines more cost-effective. The industry is actively seeking to innovate and enhance fuel efficiency in its machinery.
Demand from government
ICEMA is urging state governments to increase their investments in infrastructure development, particularly in rural regions. They are also advocating for a Production-Linked Incentive (PLI) scheme for the construction equipment sector. “We have a considerable opportunity to develop our capacity and capability to meet domestic demands, as well as to position ourselves as a global export hub. Therefore, it is essential to attract significant investments in the component sector and enhance equipment capacity,” stated Vivekanand.
