Pic Credit: Pexel
India’s mining and construction equipment industry is set for a stronger year, with equipment volumes expected to grow 8-10 per cent year-on-year to around 1.5 lakh units in FY27, as infrastructure activity picks up and exports gain momentum, according to a report.
The expected recovery comes after a 2 per cent decline in industry volumes in FY26. Early signs of improvement are already visible, with domestic equipment volumes rising 14 per cent year-on-year during the first five months of FY27, while exports jumped 34 per cent during the same period.
The recovery is being supported by higher government spending on infrastructure and improving project execution. Government capital expenditure rose nearly 30 per cent during the first four months of the fiscal, while retail registrations of mining and construction equipment also turned positive in July, pointing to a revival in market demand.
Infrastructure spending drives machinery demand
The government’s Rs 12.2 lakh crore capital expenditure programme is expected to remain a major demand driver for the sector. Higher allocations for programmes such as the Jal Jeevan Mission and Pradhan Mantri Gram Sadak Yojana, increased infrastructure funding for states and efforts to strengthen domestic manufacturing are expected to support equipment demand.
Roads, highways, mining, railways, irrigation, urban infrastructure and industrial projects all depend heavily on construction and mining machinery. As these projects move faster from planning to execution, equipment manufacturers are likely to benefit from stronger orders.
Revenue growth expected despite cost pressures
The improving volume outlook is also expected to support business performance. Revenue for a sample of 14 large mining and construction equipment companies is projected to grow 11-13 per cent in FY27, after remaining broadly flat in the previous fiscal, the report said.
However, higher operating costs remain a challenge. Rising steel prices, logistics expenses and imported component costs, along with rupee depreciation, are expected to put pressure on manufacturers’ margins.
Operating margins for the companies covered in the report are projected to decline by 100-150 basis points to around 6-8 per cent, from 8.4 per cent in FY26.
Exports add a new growth engine
Exports are becoming an increasingly important part of India’s equipment industry. Indian manufacturers are expanding their presence in international markets, creating an additional source of demand beyond domestic infrastructure spending.
Industry estimates cited recently indicate that construction equipment exports could cross 20,000 units in FY27, reflecting growing overseas demand for Indian-made machinery.
This combination of domestic infrastructure investment and overseas demand is giving manufacturers a broader growth base. It is also supporting India’s wider manufacturing ambitions by encouraging greater localisation, supplier development and production capacity.
Industry outlook remains stable
Despite pressure on margins, the credit profiles of equipment manufacturers are expected to remain stable, supported by healthy cash generation, limited external debt and adequate coverage indicators. The report has maintained a stable outlook for India’s mining and construction equipment industry.
The sector’s performance in FY27 will therefore depend on how quickly infrastructure projects are executed, the pace of mining activity, export demand and manufacturers’ ability to manage input and financing costs.
With infrastructure spending strengthening and Indian equipment gaining a larger presence in overseas markets, the mining and construction equipment industry is emerging as an important link between India’s infrastructure expansion, manufacturing growth and export ambitions.