(MENAFN- Live Mint)

India's next big manufacturing push may come from an unlikely corner-the construction site.

After years of watching cheaper Chinese machinery dominate the market, the government is now considering a safeguard duty on heavy cranes and crawlers, along with sales-linked incentives to nudge local manufacturers to ramp up production.

According to two officials aware of the matter, the ministry of heavy industries (MHI) is working on a plan to reduce import dependence in a market worth billions, just as demand for construction and infrastructure equipment surges across India.

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This assumes significance as India's $8.55 billion construction equipment market continues to rely heavily on imports-particularly from China-despite the government's push for self-reliance in manufacturing.

The dependence underscores persistent cost disadvantages, supply chain gaps, and limited domestic scale, even as policymakers and industry bodies emphasize localization and export competitiveness to meet rising infrastructure demand.

Duty on 70+tonnes

MHI is currently evaluating a proposal for safeguard duties on cranes and crawlers with capacity above 70 tonnes, said one of the officials cited.

“Imposing safeguard duties is a long-drawn process, the line ministry has to approve it, followed by finance (ministry). But MHI is currently looking at one such proposal for crawlers and cranes over 70 tonne," the official said.

Once validated, the proposal will move to the Directorate General of Trade Remedies (DGTR) under the commerce ministry for investigation. The DGTR will assess whether imports are harming domestic industry before recommending any duty to the finance ministry.

Sales-linked incentives

In parallel, MHI is designing a sales-based incentive scheme to encourage domestic production of equipment and parts that are currently imported.

“As part of the plan, MHI is also vetting a list of components which are used commonly to make construction equipment, but are frequently imported to provide fiscal sops for being manufactured locally," the second official said.

The ministry began working on the scheme in August, sharing a note with industry stakeholders about a revenue-based incentive model, as per an MHI statement issued on 10 September.

Email queries sent to MHI, the union ministry of commerce and industry, and the union finance ministry on 10 November remained unanswered.

Chinese imports

India's construction equipment market, valued at $8.55 billion (Mordor Intelligence), continues to rely heavily on imports-particularly from China.

“Chinese imports currently account for well over 20% of India's construction equipment market, since they offer cheaper options than Indian manufacturers. Excavators and other such equipment from China cost marginally less than variants made in India, and contractors often put cost savings ahead of quality and durability," said Santhosh Kumar, vice chairman of the ANAROCK Group, a real estate and property consultancy.

Chinese manufacturers sold construction equipment in India often with credit lines, making them more viable, the second official said.

Construction boom

India's construction market is worth $0.74 trillion in 2025, and is likely to grow to $1.03 trillion in 2030, according to estimates by market research firm Mordor Intelligence.

The development comes as India's demand for construction equipment has risen over the years, according to Kumar of ANAROCK.

“There has been a massive rise in demand for construction equipment in India. This stands to reason, given the pace of development in the country," he said, adding that housing as well as retail and commercial spaces have developed rapidly in the country.

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Housing sales value in the country's top seven cities is likely to rise 19% in FY26 from the previous fiscal, new commercial office project completion in the top seven cities witnessed a 15% jump in the first nine months of 2025 alon-from approx. 34.07 million sq. ft. in 9M 2024 to 39.21 million sq. ft. in 9M 2025, and retail space deployment (mall space) showed a 155% increase to 2.8 million square feet in H1 2025 from H1 2024's 1.1 million square feet, as per ANAROCK's estimates.

“Infrastructure projects like Bharatmala highways and railways make up over 42% of demand, while mining and quarrying account for about 20%," said Kumar.“Government spending on projects such as the National Infrastructure Pipeline and PM Gati Shakti remain key demand drivers."

“Chinese equipment makers hold an edge mainly due to their scale, which allows lower pricing," said Vaibhav Dange, co-founder of Build India and former NHAI adviser.“In niche areas like metro tunnel construction, Chinese firms still lead as domestic players build capacity."

He added that mining and heavy engineering are likely to be high-demand areas requiring more advanced domestic production capacities.

Exports promise

India's construction equipment industry grew 3% year-on-year in FY25, selling 1,40,191 units, per the Indian Construction Equipment Manufacturers' Association (ICEMA).

While domestic market growth remained subdued at 2.7%, the industry's overall performance was better due to a robust 10% surge observed in exports, reinforcing India's position as the world's third-largest construction equipment market.

Earthmoving equipment dominated with 71% market share, followed by material handling and concrete equipment segments.

Policy push

Looking ahead, the industry expects demand for construction equipment to rise on the back of infrastructure spending and an improving economy. However, it said policy support will be key to sustain this momentum-including steps to boost domestic demand, ease financing, and resolve supply chain issues, said ICEMA in a statement.

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The association added that India's relatively higher manufacturing costs compared with China, Japan, and other Southeast Asian economies continue to pose a challenge. These observations were part of ICEMA's report reviewing trends between FY23 and FY25.

A query sent to ICEMA president and JCB India MD and CEO Deepak Shetty remained unanswered as he is currently travelling abroad. JCB India holds about 50% share of the domestic construction equipment market, according to data from the Federation of Automobile Dealers' Associations.

Other key Indian players include Action Construction Equipment Ltd, Escorts Kubota Ltd, Ajax Engineering Ltd and Caterpillar India Ltd, among others.

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