Centre Plans ₹16,000 Crore Incentive Scheme to Boost Local Construction Equipment Manufacturing

India’s infrastructure sector is growing at a pace never seen before. From metro rail networks and high-speed expressways to ambitious bullet train corridors and mega port projects, the country’s development pipeline is massive. But behind every tunnel, bridge, and skyscraper lies a crucial backbone — construction equipment.

At present, India still depends heavily on imports for several high-value machines such as tunnel boring machines (TBMs), large cranes, and specialised rigs. These are essential for time-bound projects, yet delays in global supply chains often disrupt execution timelines. Recognising this gap, the Central Government is working on a ₹14,000–16,000 crore incentive scheme to encourage domestic production of key construction equipment.

Officials familiar with the plan said the scheme, which could be rolled out as early as the next fiscal year, will provide targeted support for manufacturing high-tech machinery that India currently imports from countries like China, Japan, South Korea, and Germany. By localising production, the government aims to reduce dependence on imports, strengthen supply chains, and make project execution more resilient.

According to industry experts, nearly half of the mining and construction equipment components used in India are still imported. These include critical items like hydraulics, undercarriages, electronic control units (ECUs), sensors, and telematics. If implemented effectively, the localisation drive could raise domestic manufacturing levels to 70–80% over the next 5–7 years. This transition could also transform India into a $25 billion annual market and save nearly $3 billion in foreign exchange every year.

For companies involved in engineering, procurement, and construction (EPC), this scheme could be a game-changer. Many firms currently struggle with equipment shortages during peak demand cycles, especially in remote or high-altitude project sites. A stronger domestic equipment base would not only ensure availability but also lower costs and reduce project delays.

Industry associations have long pushed for a Production-Linked Incentive (PLI) scheme for heavy construction equipment, similar to those in electronics and automobiles. While government procurement already gives preference to “Make in India” products, local suppliers often face challenges in producing highly specialised machinery. The new scheme is expected to bridge this gap.

With India planning to quadruple port capacity, expand highways to over 200,000 km by 2047, and increase metro rail corridors fivefold, the demand for advanced construction machinery will only rise. The proposed incentive scheme is not just about machines — it’s about ensuring India builds its future with strength, speed, and self-reliance.