ICRA projects a 2–5% year-on-year growth in India’s mining and construction equipment (MCE) industry for FY2026, aiming for sales of 143,000–147,000 units. This follows a subdued start to the fiscal year, with Q1 FY2026 volumes declining by 1% compared to the previous year. The downturn was primarily due to early monsoons, unseasonal rains, and sluggish infrastructure project awards, particularly in road construction and the Jal Jeevan Mission.
Despite these challenges, ICRA anticipates a rebound in the second half of FY2026. The Indian government’s capital expenditure plan, allocating ₹11.2 lakh crore for FY2025–26, is expected to drive infrastructure projects under schemes like the Pradhan Mantri Gram Sadak Yojana (PMGSY), PM Awas Yojana-Gramin (PMAY-G), and the Jal Jeevan Mission. This renewed focus on infrastructure is anticipated to stimulate demand for construction equipment.
Export performance offers a silver lining, with a 31% year-on-year growth in Q1 FY2026, driven by increased shipments of backhoe loaders, excavators, and skid steer loaders. The United States remains a significant market, accounting for a substantial share of India’s MCE exports. However, potential trade barriers, such as a 26% reciprocal tariff by the U.S., could impact future export dynamics.
The industry’s outlook is tempered by rising costs associated with compliance to Stage V emission norms and mandatory safety features, which have led to price increases. Additionally, tighter liquidity conditions among non-banking financial companies (NBFCs) may affect financing availability for potential buyers.
