India's construction equipment industry has cut its growth expectations for the current fiscal from double digits to single digits, as a more-than-doubling of bitumen prices, a fallout of the West Asia conflict, brings blacktop road construction to a crawl months before the usual monsoon lull.
Bitumen Price Surge Squeezes Road Contractors
Bitumen, the petroleum-derived binder used in asphalt road surfacing, has risen from about Rs 30,000 a tonne in February to Rs 70,000–75,000 a tonne now, according to Shalabh Chaturvedi, managing director of CASE Construction Equipment India and SAARC.
The squeeze is most acute for road contractors who won highway tenders through aggressive bidding. "Many of the road contractors won in very aggressive competitive bidding at minus 30 %, minus 35%," Chaturvedi told Autocar Professional, referring to bids placed 30–35% below the government's base price. "Now, if they have to execute within the budget framework, the entire purchase dynamics changes, and that slows down their execution capability. Many of them are in a wait-and-watch situation."
The result: road construction, which typically decelerates only when the rains arrive, slowed early this year. "In the monsoon period, road construction slows down. But this year it started before, mainly because of the bitumen prices," Chaturvedi said. Unpaved rural road work under schemes such as PMGSY has continued largely unaffected, it is asphalt-surfaced projects that have stalled.
NHAI Road Awards Slow Down Amid ICRA Warning
The commodity shock lands on a road sector already losing momentum. NHAI awarded just 3,124 km of projects in FY26, down 22 percent year-on-year and well short of its roughly 4,500 km target, brokerage Nuvama noted in May, attributing the weakness to approval delays and thin private appetite for build-operate-transfer projects.
Rating agency ICRA has flagged the bidding behaviour that is now amplifying the pain: about 71% of NHAI/MoRTH engineering-procurement-construction contracts over the past three years were won at discounts of more than 20 percent to base price, precisely the contracts most exposed when input costs spike. ICRA expects national road execution to moderate further in FY27, with no increase in NHAI's budgetary allocation to drive a recovery.
Equipment Makers Revise FY27 Growth Outlook
For equipment makers, road building is a core demand driver, particularly for backhoe loaders, excavators and vibratory compactors used in earthwork and surfacing. Chaturvedi said the West Asia effect took time to reach the market. "April and May did not really see much of an impact in the Indian domestic market," he said. "But as June came, there was again a slowdown, the effect of West Asia prices started to materialise."
Equipment demand outside roads offers partial insulation. Chaturvedi pointed to the Jal Jeevan Mission rural water programme, with an outlay of nearly Rs 67,000 crore this fiscal and low spending last year leaving room for catch-up, along with emerging demand from data centres and logistics parks.
Even so, the arithmetic for the year has changed. The industry entered FY27 expecting a rebound after last fiscal's 7 percent domestic decline — cushioned by 32 percent export growth, on the logic that demand had been postponed, not destroyed.
"From the beginning of the year, where I was expecting double-digit percentage growth, it has now tapered down to single digit," Chaturvedi said. "It will still be growth versus the prior year. But because of the West Asia crisis, and having lost this quarter versus the ambition we had, there will be some pullback."