The government is preparing to introduce incentive schemes for construction equipment (CE) manufacturers who develop machines running on biofuels and alternative fuels, Union Road Transport and Highways Minister Nitin Gadkari announced.
11 Sep 2025 | 2102 Views | By Glenn Noronha
Speaking at the Society of Indian Automobile Manufacturers (SIAM) event, Gadkari revealed that the National Highways Authority of India (NHAI) is actively considering financial incentives to encourage original equipment manufacturers (OEMs) to transition from conventional diesel-powered construction machinery to cleaner fuel alternatives.
"We are working on bringing new schemes ...
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Speaking at the Society of Indian Automobile Manufacturers (SIAM) event, Gadkari revealed that the National Highways Authority of India (NHAI) is actively considering financial incentives to encourage original equipment manufacturers (OEMs) to transition from conventional diesel-powered construction machinery to cleaner fuel alternatives.
"We are working on bringing new schemes for alternative and biofuel construction equipment. OEMs which make alternative and biofuel CE machines will get benefit from the scheme," Gadkari stated during his address to industry leaders and stakeholders.
The announcement comes as part of the government's broader strategy to reduce carbon emissions across all sectors, including the construction and infrastructure development industry. Construction equipment, traditionally powered by diesel engines, contributes significantly to air pollution and greenhouse gas emissions at project sites across the country.
India's ambitious infrastructure development plans, including the Bharatmala and Sagarmala projects, involve extensive use of construction machinery. The transition to alternative fuels could substantially reduce the environmental impact of these massive undertakings while supporting the country's commitment to achieving net-zero emissions by 2070.
The construction equipment industry has been exploring various alternative fuel technologies, including compressed natural gas (CNG), liquefied natural gas (LNG), hydrogen fuel cells, and electric powertrains. Biofuels derived from agricultural waste and other organic materials present another promising avenue for reducing dependence on fossil fuels.
Several global and domestic manufacturers have already begun developing prototypes and commercial versions of construction equipment powered by these alternative fuels, though adoption has been limited due to higher costs and infrastructure challenges.
The proposed incentive scheme is expected to accelerate research and development in the construction equipment sector, potentially making India a hub for manufacturing eco-friendly machinery. The move could also help domestic manufacturers compete more effectively with international players who are investing heavily in green technology.
The construction equipment market in India, valued at approximately $4 billion, has been growing steadily due to increased infrastructure spending. The government's push for alternative fuel adoption could create new opportunities for innovation while addressing environmental concerns associated with large-scale construction projects.
The detailed framework of the incentive scheme and timeline for implementation are expected to be announced in the coming months.
The announcement complements the government's broader PM E-DRIVE (Electric Drive Revolution in Innovative Vehicle Enhancement) scheme, which focuses on promoting electric mobility across various vehicle categories. While the NHAI incentive targets construction equipment specifically, the PM E-DRIVE scheme addresses non-construction equipment vehicles including electric buses, trucks, three-wheelers, and two-wheelers.
The PM E-DRIVE initiative provides financial incentives, subsidies, and policy support for manufacturers and buyers of electric vehicles in the commercial and personal transportation segments. This comprehensive approach ensures that India's transition to sustainable mobility encompasses both infrastructure development machinery and regular transportation vehicles, creating a holistic ecosystem for alternative fuel adoption across the automotive industry.