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The Indian mining and construction equipment (MCE) industry is projected to revive in H2 FY26, following a subdued start to the year, according to ICRA. The recovery is expected to be driven by increased government capital expenditure under schemes like Jal Jeevan Mission and PMGSY. Q1 FY26 saw MCE volumes dip 1% year-on-year due to early monsoons and slow project awards, though exports grew 31%. ICRA forecasts 2-5% volume growth for FY26, despite margin pressures from new emission norms and rising input costs, maintaining a positive long-term outlook.
Rating agency ICRA projects a turnaround in the Indian mining and construction equipment (MCE) industry in the latter half of the current fiscal year. Following a subdued start to FY2026, this shift across India is expected to be primarily driven by renewed government-led capital expenditure. Advertisement
The MCE sector experienced a muted performance in Q1 FY2026, with volumes dipping by 1% year-on-year. This weakness in domestic demand, which ICRA expects to continue into Q2 as monsoon conditions affect the construction sector, was due to multiple factors, including early monsoons, unseasonal rainfall, and slow new project awards.
Ritu Goswami, Sector Head, Corporate Ratings, ICRA, stated that early monsoons and unseasonal rains in some regions disrupted construction and mining activities in Q1 FY2026. She also noted that this is reflected in the flat production data reported by Coal India Limited, India's largest miner, during this period compared to a year ago. The earthmoving segment, which forms the bulk of domestic MCE demand, was particularly affected in Q1, with domestic volumes declining 4% year-on-year. However, exports offered some relief with a 31% surge. This growth in exports was led by backhoe loaders, excavators, and skid steer loaders, which collectively accounted for 76% of the total exported volumes and saw a 34% year-on-year growth.
ICRA believes that key government schemes such as the Jal Jeevan Mission (JJM), Pradhan Mantri Gram Sadak Yojana (PMGSY), and PM Awas Yojana-Gramin (PMAY-G) are set to receive increased attention and budgetary allocations. This is part of the INR 11.2 lakh crore capital expenditure plan announced in the union budget for FY2025-26. This is likely to result in a revival in project execution and demand for MCEs.
While regulatory changes like CEV-V emission norms and rising input costs are expected to keep OEM (Original Equipment Manufacturer) margins under pressure, ICRA maintains its forecast of a 2-5% volume growth for FY2026, translating to 1.43-1.47 lakh units. The long-term outlook remains positive, supported by strong export potential and a government-led infrastructure push. The performance of the mining and construction equipment industry is a key indicator of infrastructure development and economic activity in India.
Source: ANI
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