India’s Construction Equipment Industry Faces Slowdown, Growth Drops to 3% in FY25

India’s construction equipment sector has experienced a significant slowdown in fiscal year 2025, with growth declining to 3 percent compared to the double-digit expansion seen in previous years. The industry, which plays a crucial role in infrastructure development, has been impacted by election-related restrictions, project delays, and payment issues to contractors.  

 

Factors Contributing to the Slowdown  

- The Rs 86,000 crore construction equipment industry saw a sharp deceleration after growing by 24 percent in FY24 and 21 percent in FY23.  

- Restrictions on new project announcements due to the model code of conduct before elections led to delays by both the central government and several states.  

- The pace of infrastructure execution slowed, affecting national highways, rural roads, and mining projects.  

- Payment delays to contractors further contributed to reduced purchases of heavy machinery, impacting major companies such as Caterpillar and JCB.  

 

Market Trends and Industry Response  

- The Indian Construction Equipment Manufacturers Association (ICEMA) reported muted demand for mining equipment over the past 15 months.  

- The earthmoving equipment sub-segment recorded a modest 5 percent year-on-year growth, while other categories saw declines.  

- Export growth remained mixed, with concrete equipment exports surging by 133 percent and road equipment exports rising by 122 percent year-on-year.  

- However, overall export volume growth moderated to 7 percent, a sharp decline from the 49 percent increase recorded in FY24.  

 

Future Outlook and Industry Challenges  

- The industry is expected to face continued challenges, including tight liquidity conditions, financing constraints, and price escalations due to regulatory changes.  

- Stricter emission norms and new safety features set to be implemented in July 2025 may increase equipment prices by 12 to 15 percent, further impacting demand.  

- Despite these hurdles, the Indian government’s continued emphasis on infrastructure development is expected to provide some stability to the sector.  

 

Source: Economic Times, Indian Construction Equipment Manufacturers Association.