Govt plans Rs 13,000-cr boost for construction equipment

The Ministry of Heavy Industries (MHI) is planning a scheme with an outlay of ₹13,000 crores to bolster and complement the construction equipment sector while reducing the dependency on imports. The proposal is under discussion with the other ministries and Niti Aayog and is likely to go the Cabinet in a few months.

The scheme, part of the government’s vision to create a strong domestic ecosystem for critical machinery, will focus on high-value items such as tunnel boring machines (TBMs), ropeway/elevated systems, backhoe loaders, tower cranes, crawler cranes, engines and transmissions. TBMs are critical to metro rail networks, national and state highways, and ropeway/elevated systems are gaining in importance to urban mobility and tourism in hilly areas.

Also Read: Engineering the Future: AI and Mobility Platforms in Smart Electronics

According to officials, the scheme will be linked to performance with incentives based on higher production/production increments. Companies will have to ensure at least about 50% domestic value addition, which includes the reduction of dependency on imported components such as engines, sensors, control systems and specialized alloys.

Leading companies like JCB India, ACE, Ashok Leyland, Cummins India, and Tata Hitachi will benefit, with the chance to increase capacity and local supply chains. The emphasis on indigenous manufacturing for engines and transmissions could dramatically reduce the sector's import bill while stimulating associated industries from steel to high-end materials.

The initiative comes at a time of unparalleled infrastructure investment at ₹11.21 lakh crore in FY26 in the context of Viksit Bharat in 2047. The demand is supported by national initiatives, such as Bharatmala, Sagarmala, and Gati Shakti freight corridors, which have the potential to enhance India's $9.5-billion construction equipment industry, projected to more than double in size before 2030, thus becoming the second largest in the world.