Mining and construction equipment industry projected to grow 8-10% in FY27: ICRA

By Staff Report 1 September 29, 2026 6:33 pm IST

Industry volumes are expected to reach 1.5 lakh units, while higher steel, logistics and imported component costs could put pressure on operating margins.

ndia’s mining and construction equipment (MCE) industry is projected to grow 8-10% year-on-year in FY27, with volumes expected to reach around 1.5 lakh units, according to ICRA. The projection followed a 2% decline in industry volumes in FY26.

ICRA said the recovery was supported by improving infrastructure project execution, higher state-level infrastructure spending, sustained public capital expenditure and stronger export demand. Industry volumes grew 14% year-on-year during the first five months of FY27.

The earthmoving segment remained a key contributor to the recovery. Backhoe loaders and crawler excavators together accounted for more than 90% of sales, with backhoe loader volumes increasing 11% year-on-year during the first five months of FY27. Excavator volumes also increased 17% during the period, supported by mining activity and the adoption of specialised equipment such as mini excavators.

Material handling equipment also recorded a recovery, with volumes increasing 40% year-on-year in the first five months of FY27 after declining 10% in FY26. The growth was supported by demand for pick-and-carry cranes. Road equipment, however, recorded a 4% decline during the same period amid subdued project awards by the National Highways Authority of India and the Ministry of Road Transport and Highways.

Exports have emerged as another growth driver for the MCE industry. Export volumes increased 30% in FY26 and a further 34% year-on-year in the first five months of FY27. ICRA attributed the growth to improved emission compliance, cost competitiveness and OEM-led diversification across developed and emerging markets.

The share of exports in industry volumes nearly doubled to around 17% during the period, compared with around 9% in FY25. Earthmoving equipment accounted for around 75% of exports, led by backhoe loaders, crawler excavators and skid steer loaders.

The United States remained the largest export destination, accounting for around 15% of exports, followed by Africa at 7%, Saudi Arabia at 5% and the UAE at 4%. ICRA said shipments to the US had started recovering after tariff moderation, while free trade agreements with the UK, EU, Australia, New Zealand and the UAE could provide additional opportunities.

Despite the expected volume recovery, profitability is expected to face pressure. ICRA projected operating margins for its sample of 14 large MCE players to moderate by 100-150 basis points to 6-8% in FY27, compared with 8.4% in FY26. Higher steel prices, logistics costs and imported component costs amid rupee depreciation were identified as key pressure points.

ICRA also projected 11-13% year-on-year revenue growth for the 14 large MCE players in FY27, following a broadly flat performance in FY26. The expected growth was attributed to volume recovery, continued export momentum, modest price increases and a favourable product mix.

The agency said government capital expenditure had increased by nearly 30% during the first four months of FY27. It expects industry momentum to strengthen through the year, supported by the government’s ₹12.2 lakh crore capital expenditure outlay, higher allocations for the Jal Jeevan Mission and Pradhan Mantri Gram Sadak Yojana, increased infrastructure funding for states and the proposed Scheme for Enhancement of Construction and Infrastructure Equipment (CIE).

Despite margin pressures, ICRA maintained a stable outlook for the Indian MCE industry, citing strong cash accruals, limited external debt and healthy coverage indicators among original equipment manufacturers.

Source: Business Standard