However, the industry anticipates higher infrastructure capex in the Union Budget 2026-27 alongside accelerated project awards.
Domestic demand for construction equipment in India faced headwinds in FY2025-26, with sales remaining subdued. According to the latest industry data reported by the Indian Construction Equipment Manufacturers Association (ICEMA), domestic construction equipment sales declined 9 per cent from 89,244 units in April-December FY2025 to 81,566 units in the corresponding period of the current fiscal.
The slowdown reflects weaker infrastructure activity, project execution challenges, financing constraints, and near-term demand softness in key segments. Exports, however, surged strongly, reinforcing India’s competitiveness in international markets.
Despite domestic weakness, export performance remained robust. The industry is optimistic about a higher infrastructure capital expenditure in the upcoming Union Budget 2026-27 and faster awards of government projects.
Deepak Shetty, President, ICEMA and CEO & Managing Director, JCB India, said, “As the industry adapts the new emission norms, export competitiveness is expected to strengthen with new geographies opening up as export destinations for India. However, at a broader level, we remain hopeful of domestic demand coming back as infrastructure development is a consistent focus area for the government, particularly rural infrastructure, which is a key growth driver for our Industry.”
Per ICEMA data, in Q3 FY2026 total construction equipment sales—including domestic sales, original equipment manufacturer (OEM) exports, and unauthorised exports—stood at 35,891 units. This denotes a 9 per cent year-on-year decline compared with Q3 FY2025, highlighting ongoing demand challenges. Earthmoving equipment, the largest segment, recorded 25,715 units, down 9 per cent from the previous year. Material handling equipment sales were 4,306 units, a 10 per cent decline. Concrete equipment sales stood at 3,335 units, down 9 per cent YoY. Road construction equipment reported 1,942 units, a 7 per cent decline, while material processing equipment accounted for 593 units, down 1 per cent.
While domestic sales reduced by 10 per cent, exports grew by 28 per cent, cushioning the overall industry decline to 5 per cent in the first nine months of FY2026. Total sales stood at 94,035 units compared to 98,977 units in the same period of FY2025, indicating robust overseas demand and market diversification. Without unauthorised exports, however, the decline would be steeper, ICEMA noted.
Unauthorised exports remain a major concern, particularly for backhoe loaders and excavators. Equipment sold domestically by OEMs is exported without informing OEMs or finance companies, creating repayment risks for lenders.
Revival Prospects
Despite ongoing challenges, industry leaders emphasise that a meaningful revival will depend on expediting project contract awards in infrastructure segments such as roads, highways, and railways, faster execution, timely fund disbursements, and a supportive policy environment to restore buyer confidence and sustain investment momentum. The industry also looks forward to government support in migrating supply chains to India under the Atmanirbhar Bharat (self-reliant India) framework.
Ramesh Palagiri, President Designate, ICEMA, and Managing Director & CEO, Wirtgen India, stated, “Although domestic demand has been impacted by slower project awarding and execution, we are optimistic of a turnaround. With strong export performance and the hope of front-loaded awarding of projects and higher infrastructure capex in the upcoming budget, we believe domestic construction equipment demand will strengthen and contribute to a sustained industry recovery in 2026.”
Vivek Hajela, Convener, ICEMA Industry Analysis & Insights Panel and Executive Vice President & Head, Construction & Mining Machinery Business, L&T Construction & Mining Machinery, added, “While execution pace and contract award in road construction have moderated due to land acquisition and approval delays, the underlying pipeline of projects remains healthy with significant sanctioned projects and improved awarding activity. With streamlined processes and focused execution, we expect this to translate into stronger domestic construction equipment demand in the coming months as infrastructure progress accelerates.”
The Indian construction equipment industry is the third-largest in the world, employing more than 3 million people directly and indirectly. Prepared by the ICEMA Industry Analysis & Insights Panel, the report is based on data collated from OEM members representing around 95 per cent of the construction equipment industry, ensuring comprehensive and credible insights for policymakers and stakeholders.