Union Budget 2026–27: Indian Construction Equipment Sector

India - Union Budget 2026–27 has given a strong push to the construction equipment (CE) sector, reinforcing infrastructure development and domestic manufacturing as key growth drivers. Public capital expenditure has been pegged at $135.2 billion (INR 12.2 trillion) for FY27, with large investments planned in highways, railways, freight corridors, inland waterways, coastal logistics, and urban infrastructure.

The focus on freight corridors, high-speed rail, and coastal connectivity is expected to improve logistics efficiency, reduce project costs, and enhance equipment utilization. Measures such as the proposed Infrastructure Risk Guarantee Fund aim to encourage private investment, indirectly supporting sustained CE demand.

A major highlight is the launch of a dedicated incentive scheme for Construction and Infrastructure Equipment (CIE) manufacturing. The scheme aims to boost localization of critical components like hydraulics, engines, and transmissions, reduce import dependence, and strengthen India’s supply chain and export competitiveness. ICEMA has welcomed the move as a milestone for advancing high-technology manufacturing in the country.

Mr. Deepak Shetty, President of ICEMA and CEO of JCB India, said, “It will promote advanced manufacturing and generate employment, while Ramesh Palagiri of Wirtgen India noted the measures will revive domestic demand and support technology development.”

Mr. Sorab Agrawal of ACE, said, “The policy support will improve productivity and safety at project sites”, and Mr. Shalabh Chaturvedi of CASE India, said, “The combining domestic manufacturing incentives with global trade access strengthens India’s position as a hub for high-tech construction equipment.”

Bhuvan Anandakrishnan of Caterpillar welcomed the initiatives, stating that infrastructure focus, export promotion, and digital transformation create a stable environment for long-term growth. Timely implementation and clear scheme guidelines will be key to realising the Budget’s potential for the sector.

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