India Construction Equipment Growth Slows to Single Digits by FY27

India’s construction equipment industry is now projected to experience moderated, single-digit growth by FY27, a notable reduction from earlier double-digit expectations. This revised outlook stems from a confluence of factors impacting project economics and execution.

Shifting Growth Projections Explained

The sector’s growth trajectory has been recalibrated, moving away from more optimistic double-digit projections. This adjustment reflects a more cautious assessment of market conditions and operational challenges.

• Earlier projection: double-digit growth
• Revised projection for FY27: single-digit growth

Core Headwinds Impacting Sector Expansion

Escalating prices of essential raw materials like steel and bitumen are primarily responsible for the dampened growth forecast. These increased input costs have directly hindered the economic viability and execution speed of infrastructure projects, particularly in road construction.

• Steel prices: Escalating
• Bitumen prices: Significantly increased before easing slightly, still high

Beyond material costs, the industry also grapples with persistent geopolitical uncertainties and ongoing delays in the execution of critical infrastructure initiatives. These broader challenges contribute to a difficult operating environment for equipment manufacturers.

• Slower disbursements for the Jal Jeevan Mission
• Delays in contractor payments
• Increased equipment costs due to new CEV Stage V emission norms implemented in January 2025

Recent Performance and Long-Term Outlook

Despite these headwinds, the industry demonstrated resilience in its export performance, even as domestic sales faced significant pressure. Total sales for 2025-26 experienced a slight decline, primarily driven by a contraction in the domestic market.

• Total sales (2025-26): 2% decline
• Domestic sales (2025-26): 7% drop
• Exports (2025-26): 32% growth

Looking further ahead, the sector is still projected for substantial growth over the next few years. It is anticipated to reach a significant valuation within the decade, reflecting underlying long-term demand.

• Projected market size by 2030: USD 14.76 billion
• Compound Annual Growth Rate (CAGR) until 2030: 8.3%

The construction equipment industry thus faces a period of recalibrated expectations, balancing persistent cost pressures and project delays against a backdrop of resilient export performance and long-term growth potential.