Daijiworld Media Network - New Delhi
New Delhi, Jul 15: After a muted start to the fiscal year, the Indian mining and construction equipment (MCE) industry is expected to witness a rebound in the second half of FY2026, driven by a renewed government focus on capital expenditure, according to credit rating agency ICRA.
“Domestic demand remained subdued in Q1 FY2026 due to early monsoons, unseasonal rainfall, and a slowdown in new project awards. This weakness is likely to continue into Q2, with recovery hinging on stronger activity in H2,” said Ritu Goswami, Sector Head, Corporate Ratings, ICRA.
ICRA reported a marginal 1% year-on-year dip in industry volumes for Q1, citing disruptions in construction and mining activities. Notably, Coal India Limited's production remained largely flat, underscoring the sector-wide slowdown.
However, a turnaround is expected as key government schemes such as Jal Jeevan Mission, Pradhan Mantri Gram Sadak Yojana, and PM Awas Yojana-Gramin receive enhanced funding under the Rs 11.2 lac cr capital outlay for FY2025-26. These allocations are anticipated to spur project execution and boost MCE demand.
Despite the domestic slump, the sector found some respite in the export market. Exports surged by 31% in Q1, led by backhoe loaders, excavators, and skid steer loaders — which together made up 76% of total export volumes and posted a 34% year-on-year growth.
The earthmoving equipment segment, which dominates the domestic MCE landscape, saw a 4% decline in volumes. Nonetheless, robust export performance helped cushion the overall impact.
While challenges such as the implementation of CEV-V emission norms and high input costs may pressure original equipment manufacturers’ margins, ICRA retained its projection of a 2–5% volume growth for FY2026. This translates to an estimated 1.43–1.47 lakh units by year-end.
The long-term industry outlook remains upbeat, bolstered by export prospects and continued infrastructure development initiatives.