BUILT TO SCALE

India’s construction equipment industry is at a significant point in its growth journey. Strong and sustained infrastructure activity continues to create demand, but an equally important shift is taking place within the industry itself. Manufacturers are expanding capabilities, strengthening local value chains and bringing greater technology, engineering and innovation into their India operations. The conversation is, therefore, moving beyond the number of machines the market can absorb to the capabilities the industry can build around that demand. This cover story examines the forces shaping this transition—from manufacturing and localisation to AI and cleaner power technologies—and the developments helping position India’s construction equipment industry for its next phase of growth and global relevance…… writes, PRERNA SHARMA.

India’s infrastructure build-out has created one of the world’s most compelling demand environments for construction equipment. The opportunity lies not only in the scale of investment, but in the widening range of projects underway—from roads and highways to metros, rail corridors, airports, logistics infrastructure, urban development, industrial projects and energy. The Union Budget for FY2026–27 reinforced this momentum, raising the Centre’s capital expenditure allocation to a record Rs.12.2 lakh crore. For the equipment industry, infrastructure spending translates directly into activity on the ground—and activity drives machine utilisation across earthmoving, lifting, concrete, road construction and material handling.

The diversification of India’s project pipeline is equally important. Roads remain a major demand driver, but metros require specialised excavation and lifting, rail and freight corridors need heavy-duty equipment, airports bring large-scale and specialised civil works, while urban and industrial projects create demand across multiple equipment categories.

This gives the industry more than one demand engine. The early FY2026–27 numbers underline the momentum. ICEMA reported total construction equipment sales of 31,945 units in the first quarter, up 11% year-on-year. Domestic sales rose 9%, while exports increased 32%, with growth across major equipment categories. The pipeline ahead remains substantial. As of July 2026, the Centre was monitoring 1,775 large infrastructure projects across 17 ministries and departments, with a revised cost of Rs.37.11 lakh crore.

Execution will determine how quickly investment converts into equipment demand. Project awards, approvals, contractor liquidity and fund flows all influence activity at the jobsite. But the larger picture remains positive. India is building simultaneously across transport, urban mobility, logistics, industry, energy and digital infrastructure. Data centres and new industrial investments are adding further depth to the construction pipeline. For equipment manufacturers, the opportunity is no longer tied to a single infrastructure programme or machine category. It is being shaped by the cumulative impact of a country building across multiple sectors and at multiple scales.

THE MANUFACTURING MOMENT

India’s construction equipment industry has grown alongside the country’s infrastructure ambitions. The next phase could see greater emphasis on building the manufacturing capabilities behind the machines transforming that landscape.

That shift has gained momentum with the proposed Scheme for Enhancement of Construction and Infrastructure Equipment, announced as part of the Union Budget for FY2026–27. The initiative aims to strengthen domestic manufacturing of technologically advanced equipment, including tunnel boring machines, lifts and firefighting equipment—categories becoming increasingly important as projects grow more complex and specialised.

Recent reports indicate that the government is preparing an incentive programme of around $1.2 billion over seven years, with the potential to attract approximately $1.8 billion in fresh investment. The framework is also expected to encourage higher local value addition in equipment categories where India remains dependent on overseas manufacturing.

The significance extends beyond assembling finished machines. Advanced equipment manufacturing requires precision engineering, hydraulics, electronics, controls, specialised materials and a capable supplier ecosystem. As India expands production in more technology-intensive categories, these capabilities can develop alongside it, strengthening the wider industrial base.

The timing is significant. Metro systems, tunnels, rail corridors, ports, airports and large urban projects are generating demand not simply for more equipment, but for machines capable of handling increasingly specialised applications.

India has already established strength in several mainstream categories. The next opportunity is to build greater depth in high-value segments where engineering, product development and specialised components play a larger role. That will require more than additional factory capacity. Advanced manufacturing depends on sustained investment in product development, testing, suppliers and engineering talent, as well as the ability to adapt equipment to Indian operating conditions.

There is also a wider strategic opportunity. Stronger domestic capabilities can help India serve its growing home market while becoming more deeply integrated into global production and sourcing networks. The industry’s next manufacturing chapter, therefore, is not simply about producing more machines. It is about expanding what India can design, develop and manufacture—and building a deeper foundation for long-term competitiveness.

MOVING UP THE VALUE CHAIN

India’s construction equipment industry has built the scale. The next measure of its progress will be the value that scale can create. For much of its growth journey, the industry has been defined by capacity, volumes and the expanding needs of India’s infrastructure programme. Today, a more significant shift is taking shape. Manufacturers are broadening product portfolios, investing in larger and more sophisticated facilities, strengthening engineering capabilities and building operations that increasingly support markets beyond India.

The numbers illustrate the strength of the base. Construction equipment sales reached 136,995 units in FY26, while exports rose to 17,394 units. More than 95% of the equipment sold in India is now manufactured domestically, providing the industry with a strong platform from which to deepen technology, engineering and product capabilities.

JCB India’s journey demonstrates what this progression can look like at scale. The company crossed the 600,000-machine production mark in India in 2026, underlining the scale and maturity of its operations. Equipment manufactured in India is now exported to more than 135 countries, transforming the country from a large domestic market into an important part of JCB’s international manufacturing network.

SANY’s growth tells a similar story from a different perspective. The company’s integrated Chakan facility represents an investment of more than Rs.750 crore, bringing together manufacturing, R&D, testing, quality inspection and service infrastructure. Its portfolio today spans earthmoving, cranes, concrete equipment, foundation machinery, mining, road equipment, port machinery, renewable energy solutions and material handling. Supported by 42 dealerships and more than 260 customer touchpoints, the business reflects how scale is increasingly being built across the entire equipment ecosystem rather than around individual product categories.

This breadth is becoming increasingly important. India’s infrastructure requirements are no longer concentrated in a few conventional segments. Highways, metros, mining, ports, industrial projects, logistics facilities and energy infrastructure each bring different application requirements. As a result, manufacturers are being pushed to develop not just larger portfolios but more specialised capabilities.

CASE Construction Equipment’s Pithampur facility crossing the 10,000-unit production milestone is another indication of this manufacturing maturity. The company’s continued focus on localisation and capacity development reflects India’s growing importance within its wider operations. At the same time, the market’s evolution is encouraging manufacturers to move beyond mainstream products towards a broader range of applications and customer requirements.

For Volvo Construction Equipment, that progression is increasingly linked to product development. Its Made-in-Bharat EC215 excavator, highlighted in 2026, has been developed around Indian operating conditions and customer needs. The company’s Bengaluru Technology Centre adds another dimension, strengthening India’s role in R&D, localisation and product development. The distinction is important: when engineering moves closer to manufacturing, India becomes capable of contributing not just to the production of equipment, but to decisions around what equipment is developed in the first place.

The same shift is visible across specialised equipment. Schwing Stetter’s new Concrete Mixer Factory in Jamshedpur, inaugurated in 2026, adds manufacturing capacity in a category closely linked to India’s expanding construction activity. The rollout of the first fully built truck mixer and the focus on developing a stronger local vendor ecosystem underline how manufacturing expansion can create wider capabilities around a product.

Mahindra Construction Equipment, meanwhile, highlights the value of designing around local applications. Its focus on equipment suited to Indian jobsites demonstrates that moving up the value chain does not always mean pursuing greater complexity alone. It also means developing a deeper understanding of how customers work—and translating that understanding into products that improve operating economics, productivity and lifecycle value.

The L&T-Komatsu ecosystem brings another layer to this progression. Global equipment technology is being combined with domestic application expertise, distribution strength and lifecycle support. L&T’s 2026 partnership with FAYAT Road Equipment to market and support BOMAG machinery further expands its presence in specialised road construction, where equipment capability must be backed by strong service and application knowledge.

Taken together, these developments reveal a more mature growth story. India’s construction equipment industry is steadily moving beyond the traditional measures of factory output and unit sales. The value chain is becoming wider—from product development and engineering to specialised manufacturing, supplier ecosystems, digital capabilities and lifecycle support.

This is where the next level of growth will be created. The ability to manufacture at scale remains fundamental. But the companies that will shape the next chapter will increasingly be those that can add greater value around every stage of the machine—from how it is designed and engineered to how it is manufactured, supported and improved through its working life. India has built the scale. It is now building the capability to make that scale count for more.

THE LOCALISATION ADVANTAGE

A machine may carry a global badge, but its manufacturing strength increasingly depends on how much of it is built close to home. For India’s construction equipment industry, the focus is now shifting beyond finished machines to the components, systems and technologies that determine performance, reliability and value creation.

The progress is substantial. According to ICEMA, average localisation across the industry is around 60%, while mature categories such as backhoe loaders and pick-and-carry cranes have crossed 90% indigenisation. The industry’s objective is to raise overall indigenisation to 70–80% by 2030.

The remaining gap lies in some of the most technology-intensive areas. Critical hydraulic systems, undercarriage assemblies, electrical and electronic components and telematics continue to have a significant import component. As equipment becomes more efficient, connected and automated, building capability in these areas will become increasingly important.

That is also changing the nature of localisation. The objective is no longer simply to manufacture more parts in India, but to develop suppliers capable of participating in engineering, testing and technology development. A stronger component ecosystem can improve supply-chain responsiveness, reduce lead times and give OEMs greater flexibility to adapt products for local applications.

The market itself provides a powerful incentive. ICEMA estimates India’s construction equipment industry could grow from around $9.5 billion today to approximately $45 billion by 2035, creating significant demand for the thousands of components and systems that go into modern equipment.

Policy could provide further momentum. The proposed $1.2-billion incentive programme for construction and infrastructure equipment is expected to encourage higher domestic value addition and attract around $1.8 billion in fresh investment over seven years, with an emphasis on technologically advanced equipment and capabilities.

For OEMs, the benefits of long-term supplier development are already evident. JCB India, for instance, has achieved more than 95% indigenisation in its India-made backhoe loaders, supported by close to 380 domestic suppliers. Replicating that depth across advanced hydraulics, electronics, sensors and connected technologies will require fresh investment in manufacturing, testing and engineering.

The opportunity, however, is larger than local content. India’s real localisation advantage will come from building a supplier ecosystem capable of designing, developing and manufacturing increasingly complex systems at competitive scale. That is what will turn localisation from a manufacturing metric into a lasting competitive strength.

THE AI ADVANTAGE

AI is adding a new dimension to construction equipment: the ability to learn from how machines and projects actually perform. For decades, equipment competition has centred on productivity, reliability, fuel efficiency and lifecycle costs. Those fundamentals remain unchanged. What AI adds is the ability to turn machine and project data into faster and better decisions—on maintenance, utilisation, safety and site productivity.

The most immediate application is predictive intelligence. Connected equipment generates large volumes of information on operating hours, fuel consumption, component health and machine utilisation. AI can identify patterns within this data, helping predict potential failures, flag inefficient operating practices and improve maintenance planning. The objective is to move from reacting to downtime to anticipating it.

The next frontier is physical AI. Unlike conventional software-based AI, physical AI enables machines to interpret the real world through cameras, sensors and real-time data processing—and translate that understanding into physical action. This has particular relevance for construction, where machines operate on constantly changing terrain and alongside people, materials and other equipment.

Globally, manufacturers are beginning to explore both ends of this spectrum. Komatsu is applying AI across manufacturing, service and equipment operations, including anomaly detection, predictive maintenance and computer vision. Its 2026 partnership involving EARTHBRAIN and AIM Intelligent Machines takes the technology further towards autonomous operation of bulldozers and hydraulic excavators. The initiative combines Smart Construction’s digital terrain and project data with physical AI capable of interpreting real-world conditions and supporting machine decision-making.

This is particularly relevant to construction because traditional automation performs best in predictable environments. Jobsites are rarely predictable. Greater machine awareness could help equipment respond to changing terrain, obstacles and operating conditions.

Caterpillar is pursuing similar capabilities across connected fleets, machine intelligence and autonomy. Its Cat AI Assistant, introduced in 2026, makes equipment and service information easier to access, while the company’s wider work combines machine learning, computer vision and edge computing to support more intelligent machine operations. The larger shift is towards connecting the machine with the jobsite. AI can bring together information from equipment, project plans and fleet systems to provide a clearer view of how work is progressing. Over time, this could help contractors improve machine deployment, maintenance schedules and productivity across multiple sites.

India is beginning to see the same shift at the project level. NHAI’s decision to mandate Automated and Intelligent Machine-Aided Construction for highway projects longer than 20 km and costing more than Rs.500 crore is a significant step. It brings greater emphasis on machine-enabled monitoring, real-time information and measurable quality into major infrastructure delivery. AI is also entering construction management. DRA has adopted an AI-based platform across project management, quality inspection, site monitoring, procurement, safety and delay prediction. Nemetschek India and NCCCL are similarly working on AI-enabled digital construction workflows through pilot projects involving Runwal and L&T Realty.

These developments are important because they create demand for intelligence across the construction ecosystem. As project owners seek better visibility and quality control, contractors will require more connected fleets. As machines become more connected, AI can help turn the data they generate into practical actions.

The near-term opportunity is therefore not necessarily fully autonomous construction. It is better-informed construction—predicting failures earlier, improving machine utilisation, monitoring work more closely and supporting operators and project teams with timely information. For construction equipment, AI’s value will ultimately be measured in familiar terms: more uptime, better productivity, lower costs and greater control over project execution.

POWERING THE TRANSITION

For construction equipment, the question is not simply how to move away from diesel. It is which technology can do the job just as effectively. That distinction is particularly important in India. Construction equipment works long hours, often under demanding conditions and frequently at sites where reliable charging infrastructure cannot be taken for granted. The transition towards lower-emission equipment will therefore be shaped less by a single technology and more by the practical realities of individual applications.

Battery-electric equipment is gaining ground where those conditions are favourable. Urban projects, metro construction, tunnels, industrial facilities and other noise- or emissions-sensitive environments can provide clear use cases, particularly where operating cycles are predictable and access to power can be planned.

Volvo CE is among the companies advancing this shift, with electric machines including excavators and loaders forming part of its India portfolio. The company is also taking a broader view of electrification globally, recognising that the machine alone is only one part of the equation. Its 2026 collaboration with Hitachi Energy focuses on integrating equipment, charging, power supply and energy management—an approach with clear relevance for markets such as India, where site infrastructure will play a major role in determining adoption.

Schwing Stetter brings another relevant dimension to the Indian market. Its work around electric equipment in concrete and specialised construction applications points towards sectors where electrification could gain traction earlier, particularly across urban infrastructure and enclosed working environments.

But electrification is not the only technology being pursued. JCB’s hydrogen programme presents a different route for heavy-duty construction equipment. The company formally launched the 3CX Hydrogen backhoe loader in 2026, powered by a 55kW hydrogen combustion engine developed by JCB Power Systems. The technology is designed to retain the familiar operating characteristics of a diesel machine while using hydrogen as fuel, with the ability to refuel rapidly on site. JCB says the production machine delivers power and torque comparable with its diesel equivalent.

The hydrogen proposition has particular relevance for India because backhoe loaders and other earthmoving equipment often work for long hours in locations where charging may be difficult to establish. JCB had already brought its hydrogen-powered backhoe technology to India at EXCON, where it highlighted hydrogen as a potential pathway for decarbonising long-duty earthmoving applications.

Whether hydrogen becomes commercially viable at scale will depend on the development of production, distribution and refuelling infrastructure. But JCB’s work demonstrates an important point: the industry’s transition is unlikely to be defined by batteries alone.

Alongside these emerging technologies, cleaner diesel will continue to play a major role. The shift to CEV Stage V is already improving emissions performance across mainstream equipment, ensuring that the existing and future diesel fleet also becomes progressively cleaner.

The Indian market is therefore likely to develop through multiple pathways. Electric machines can address applications with predictable duty cycles and access to power. Hydrogen could offer an alternative for certain heavy-duty and mobile applications if the supporting ecosystem develops. Cleaner diesel will remain essential across much of the fleet.

This is not a slower transition. It is a more practical one. The companies taking the lead are not betting on one universal answer. They are developing different technologies for different jobs—and allowing productivity, infrastructure and economics to determine where each one works best.

For India, that may prove to be the most realistic route towards lower-emission construction: not replacing one powertrain overnight but steadily expanding the range of cleaner technologies available to the jobsite.

FROM SCALE TO STRENGTH

India’s construction equipment industry is reaching an important point in its evolution. Infrastructure demand remains a powerful driver, but the significance of the current growth cycle lies increasingly in what is being built around it—deeper manufacturing capability, stronger product development and a more technology-intensive equipment ecosystem.

A large market can attract factories. A mature industry creates capabilities that remain competitive beyond the market that first created them. India now has the opportunity to make that transition. The task ahead is to convert domestic scale into lasting industrial strength: to deepen engineering and technology capabilities, strengthen India’s role in global manufacturing strategies and develop products and solutions suited to both local and international markets.

The industry will continue to navigate project cycles and changing investment conditions. Growth will not always be linear. But the underlying shift is more significant than a conventional demand story. The real measure of success will not simply be how many machines India can produce, but how much capability it can build around them—and how far that capability can travel beyond its borders.

That is the journey now underway: from scale to strength.

STATS

• 136,995 UNITS – Construction equipment sold in India in FY26
• 17,394 UNITS – Construction equipment exported from India in FY26
• 95%+ Share of construction equipment sold in India manufactured domestically
• 60% à 70–80% — Average localisation today, with the industry’s 2030 target
• Rs.37.11 LAKH CRORE – Value of 1,775 major infrastructure projects under Central monitoring
• Rs.19.26 LAKH CRORE – Project expenditure recorded across the monitored infrastructure pipeline
• 1,246 PROJECTS – Transport and logistics projects driving a significant share of infrastructure activity