India Plans $1.2 Billion Incentive Scheme to Boost Advanced Construction Equipment Manufacturing

India Plans $1.2 Billion Incentive Scheme to Boost Advanced Construction Equipment Manufacturing

India is preparing to approve a $1.2-billion incentive scheme aimed at strengthening domestic manufacturing of high-value and technologically advanced construction and infrastructure equipment, with a particular focus on reducing dependence on imported machinery.

According to government sources cited by Reuters, the proposed scheme is expected to be finalised soon and could attract around $1.8 billion in fresh investment over a seven-year period. The Union Cabinet is expected to consider the proposal shortly.

The scheme is expected to cover critical equipment including Tunnel Boring Machines (TBMs), firefighting equipment and elevators used in high-rise buildings. The government is also expected to introduce local value-addition targets for machinery that is currently largely dependent on imports.

TBMs have emerged as a key area of concern for India as the country expands metro rail networks, highways and underground infrastructure. China has traditionally been an important supplier of tunnelling and boring equipment to the Indian market.

The proposed incentive programme follows the announcement made in the Union Budget 2026-27 to promote domestic production of high-value construction and infrastructure equipment. The government has been assessing the level of support required to make local manufacturing commercially viable.

State-owned BEML is among the companies that could benefit from the initiative as it plans to manufacture TBMs in India. Other equipment manufacturers, including Larsen & Toubro and Johnson Lifts, could also find opportunities under the proposed framework.

India’s construction and infrastructure equipment market is currently estimated at around ₹1 trillion and is expected to expand further as spending on roads, metros, airports and other infrastructure projects increases.

The demand for specialised equipment is also rising alongside the country’s infrastructure pipeline. A Boston Consulting Group-CII report has estimated that India’s share of the global mining and construction equipment industry could increase from about 4% currently to around 6.5% over the next five years.

The government’s push comes at a time when India is seeking greater supply-chain resilience and domestic manufacturing capabilities across strategic sectors. Reducing import dependence for specialised machinery could also strengthen the country’s ability to execute large infrastructure projects with greater domestic participation.

The proposed scheme will therefore be closely watched by construction equipment manufacturers, infrastructure developers and investors as India moves towards building a stronger domestic industrial ecosystem.