India’s construction equipment industry expects domestic sales volume to be back on the growth path during the current financial year with a high single-digit growth after demand slowed in the financial year 2026, according to the Indian Construction Equipment Manufacturers Association (ICEMA).

The industry expects domestic demand to grow about 7% in the financial year 2026-27, helped by higher government spending on infrastructure, recovery in road construction activity and increased allocation for rural projects, ICEMA President Deepak Shetty told reporters on Friday.

The industry had a weak financial year 2026, with domestic construction equipment sales falling around 7%, while overall industry volumes declined about 2%, according to ICEMA data. Exports, however, rose more than 30%, partly offsetting the fall in domestic demand. 

ICEMA said the slowdown was caused by several factors, including state elections, slower execution of roads and highways projects, reduced activity under the Jal Jeevan Mission programme and the transition to stricter Stage 5 emission norms, which increased equipment prices. 

“What happened was that while it helped exports, it also increased the prices in the Indian market,” Shetty said on the impact of the new emission standards. The standards resulted in prices going up by around 12-15%.

The industry body said demand improved in the final quarter of the year as road project awards picked up. It noted that road construction awards rose sharply between November and March after remaining weak in the first eight months of the year. 

"We have seen some signs of recovery in the latter part of the fiscal,” Shetty said.

ICEMA expects growth this year to be supported by the government’s Rs 12.2 lakh crore infrastructure allocation, higher spending on rural roads, railways, mining and urban infrastructure projects. 

Shetty said the extension of the Pradhan Mantri Gram Sadak Yojana until 2028 and higher allocation for the Jal Jeevan Mission would support demand for construction equipment, especially in rural areas. 

The industry also expects exports to remain strong as Indian-made machines gain wider acceptance overseas.

“Our machines, engineered, produced and manufactured in India, today are going to more than 125 countries,” Shetty said. “A majority of them are going to the developed part of the world.” 

ICEMA said Indian equipment makers benefited from the shift to Stage 5 emission-compliant products, which made machines suitable for developed markets and improved export competitiveness.