Union Cabinet likely to clear incentive scheme for construction equipment manufacturing by August-end

The Union Cabinet is expected to consider a new incentive scheme aimed at strengthening India’s construction and infrastructure equipment manufacturing sector, with approvals likely by the end of August. The initiative, announced in the Union Budget 2026-27, is intended to encourage domestic production of technologically advanced and high-value construction equipment while reducing dependence on imports.

According to government officials, inter-ministerial consultations on the proposed scheme have been completed, and the proposal is ready for Cabinet approval. Once approved, detailed discussions with industry stakeholders will begin to finalise implementation guidelines and operational frameworks.

The scheme comes at a time when India is witnessing rapid infrastructure expansion across highways, railways, ports, airports and urban development projects. This surge in construction activity has significantly increased the demand for specialised equipment such as tunnel boring machines, heavy-duty cranes, piling rigs, earthmoving machinery and advanced lifting systems.

Finance Minister Nirmala Sitharaman had announced the proposal during the Union Budget, stating that the initiative would strengthen domestic manufacturing capabilities for high-value construction and infrastructure equipment. The policy is also expected to encourage technology adoption, improve manufacturing competitiveness and create new investment opportunities across the sector.

Industry experts believe the demand for specialised construction machinery will continue to rise as India accelerates the development of metro rail networks, high-speed rail corridors, expressways, mining projects and port infrastructure. Increased local manufacturing capacity is expected to improve supply chain resilience while supporting the government’s vision of expanding industrial production under the Make in India initiative.

A recent report by Boston Consulting Group and CII highlighted India’s growing presence in the global construction and mining equipment industry. The country’s share of the global market has increased from around 2.5 percent to 4 percent and is projected to reach approximately 6.5 percent over the next five years, making India one of the world’s fastest-growing markets for construction equipment.

If approved, the incentive scheme is expected to play a significant role in boosting domestic manufacturing, attracting fresh investments, creating skilled employment and strengthening India’s position as a global hub for construction and infrastructure equipment production.