(MENAFN- KNN India)
New Delhi, Aug 21 (KNN) The Indian mining and construction equipment (MCE) industry, currently the third largest globally in terms of volume, is poised for a significant shift towards localisation.
A recent report by credit rating agency ICRA suggests that the localisation levels in the industry are expected to rise from the current 50 per cent to over 70 per cent by FY30.
This move could generate an annual opportunity worth approximately Rs 25,000 crore for domestic equipment vendors.
India currently imports nearly half of its component requirements, predominantly from China, Japan, and South Korea.
These imports include technology-intensive parts such as hydraulics, undercarriages, and high-tech electronics like electronic control units (ECUs), sensors, and telematics. Additionally, high-tonnage machinery and certain grades of steel alloy are also brought in from abroad.
The report highlights that the imported components are either highly technology-driven or require large-scale manufacturing to be economically viable.
Ritu Goswami, Sector Head – Corporate Ratings at ICRA, noted,“India's vision to become a USD 7 trillion economy by 2030, coupled with the government's focus on infrastructure investment, will sustain domestic demand for MCE. However, the industry must enhance its supply side capabilities to meet this growing demand.”
Increasing localisation is expected to mitigate geopolitical risks, boost operational efficiency, and generate employment.
However, challenges remain, including viability issues due to insufficient domestic demand and lagging emission standards. The unavailability of certain raw materials, such as specialty steel, also drives the high import levels.
ICRA's report underscores the Indian government's efforts to attract investment and improve the competitiveness of domestic manufacturing through initiatives like the Production-Linked Incentive (PLI) scheme.
The report also mentions the 'China+1' strategy adopted by global OEMs to diversify supply chains, which could further accelerate the localisation of components such as undercarriages.
However, the localisation of R&D-intensive electronic components will likely be the last to become viable.
(KNN Bureau)
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