India's mining and construction equipment (MCE) industry is on the brink of substantial growth, with localisation levels expected to rise to 70-80% within the next 5-7 years, according to a report by ICRA. This increased localisation could lead to savings of nearly USD 3 billion in foreign exchange annually, while also boosting India's cost competitiveness and export potential.
The report noted that the MCE sector, fueled by the country's infrastructure-driven growth, has already expanded at a compound annual growth rate (CAGR) of 12% over the last decade (FY2015 to FY2024), reaching 1.36 lakh unit sales in FY2024. Projections indicate that the industry could evolve into a USD 25 billion market by 2030, which ICRA estimates would result in approximately USD 3 billion in forex savings each year.
Achieving this growth target will depend on the development of a strong supply chain ecosystem, crucial for the industry's Vision 2030 goal of making India the world's second-largest MCE market and a global manufacturing and export hub. Several factors, including the government's Production Linked Incentive (PLI) scheme for sectors like specialty steel and auto components, are supporting this localisation drive.
Additionally, changing global geopolitical dynamics, such as the China+1 strategy adopted by original equipment manufacturers (OEMs), are encouraging greater investment in India. The Indian government’s efforts to improve ease of doing business and enhance infrastructure are further bolstering the competitiveness of the domestic manufacturing sector.
Currently, the MCE industry is heavily reliant on imports, with around 50% of components (by value) sourced from countries like China, Japan, South Korea, and Germany. The sector also depends on imports of key raw materials, such as specialty steel.
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