The mining segment could offer some relief, with tendering activity picking up in coal and mineral exploration.
14 May 2025 | 330 Views | By Shahkar Abidi
India’s construction equipment (CE) market is projected to grow at a modest, low single digit pace in FY26. Industry executives remain cautious, however, citing restrained government capital expenditure (Capex) and persistent challenges in key infrastructure sectors.
While FY25 saw growth, momentum may taper going forward as infrastructure allocations to ...
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India’s construction equipment (CE) market is projected to grow at a modest, low single digit pace in FY26. Industry executives remain cautious, however, citing restrained government capital expenditure (Capex) and persistent challenges in key infrastructure sectors.
While FY25 saw growth, momentum may taper going forward as infrastructure allocations to highways and railways appear flat, industry insiders said. The mining segment could offer some relief, with tendering activity picking up in coal and mineral exploration. Backhoe loader sales, however, are expected to stagnate, held back by cost increases due to stricter emission regulations and a high comparison base from the previous year. Additionally, geopolitical developments, financial liquidity constraints and policy uncertainties could pose further risks to demand.
“Stakeholders should closely monitor the pace of project execution, policy announcements post-government formation, and the industry's adaptability to environmental and regulatory changes,” said Sandeep Singh, Managing Director at Tata Hitachi.
Despite typically subdued demand during election cycles, FY25 defied expectations. Political stability and continued confidence in policy direction helped sustain equipment sales across several categories.
The excavator segment led the market, growing about 3% year-over-year to a record 29,800 units. This was driven largely by demand for 20-ton and 35-ton models used in infrastructure and real estate development. The central government’s 50-year interest-free loan scheme also incentivized state-level capex, contributing to the uptick.
Increased granite and iron ore mining activity, alongside major road-building projects, supported demand for heavy-duty excavators. However, smaller segments were not as resilient. Mini excavator sales fell sharply by double digits, ending a four-year growth streak, as delays in the Jal Jeevan Mission—an initiative to improve rural water access—constrained project execution.
Mining equipment sales slumped, with coal sector tendering delays dragging down demand. Backhoe loaders, a mainstay of India’s CE market, stayed flat at 46,500 units amid emission norm transitions and a strong prior-year base. Meanwhile, wheel loaders ended FY25 at roughly 4,050 units, lifted by last-quarter pushes from manufacturers bracing for regulatory changes.
Sector performance in FY25 reflected broader macroeconomic and geographic trends. While urban and industrial infrastructure spending propped up demand for medium and large excavators, rural markets were subdued due to reduced funding for programs like PMAY, PMGSY and Jal Jeevan, weighing heavily on mini excavators and backhoe loaders.
The transition to Bharat Stage CEV-V emission norms added cost pressures and triggered supply chain realignments, causing temporary disruptions in production and sales cycles.
Geographically, Western India outperformed with 20% annual growth in earthmoving equipment sales, fueled by pre-election Capex and industrial investments in states like Maharashtra. Northern and Eastern India were flat, while Southern India saw a decline due to muted Capex and a lack of large-scale projects.
“FY25 was a year of strong momentum for both CASE and the Indian CE industry,” said Shalabh Chaturvedi, Managing Director of CASE Construction India & SAARC. He cited growing mechanization, new dealership expansion, and export strength from CASE’s Pithampur plant.
Looking ahead, Chaturvedi expects sustained demand for backhoe loaders and compactors, but excavators and mini-equipment like skid steers, could also see stronger growth as urban construction and mechanization rise.