Down 2 per cent last year, up 8 to 10 per cent this year, and thinner margins all the way through. ICRA’s new outlook on India’s mining and construction equipment industry puts a number on the recovery buyers have been sensing since mid-year, plus a warning about what it will cost them.
Key facts
- Mining and construction equipment (MCE) volumes are projected to grow 8–10 per cent year-on-year to about 150,000 units in FY27, after a 2 per cent decline in FY26.
- Operating margins for ICRA’s sample of 14 large MCE players are seen narrowing 100–150 basis points to 6–8 per cent, from 8.4 per cent in FY26.
- Revenue growth for that sample is put at 11–13 per cent in FY27, against a broadly flat FY26.
- Domestic volumes rose 14 per cent and exports 34 per cent in the first five months of the fiscal; central capital spending was up nearly 30 per cent in the first four months.
What happened
ICRA published the outlook on 28 September, holding a stable credit view on the sector. Suprio Banerjee, Vice President and Co-Group Head for corporate ratings at the agency, pointed to MCE retail registrations turning positive in July as the marker for the turn in demand. On the demand side the agency names the Rs 12.2 lakh crore central capital expenditure, higher allocations to the Jal Jeevan Mission and the Pradhan Mantri Gram Sadak Yojana, and the proposed CIE scheme for deepening equipment manufacturing. On the cost side it names steel, logistics and imported components, all made worse by rupee depreciation. The Hans India carried the report.
What does a margin squeeze mean for machine prices?
This is the part a ratings note does not spell out. FY26 was a falling-volume year, and falling volume is when manufacturers buy market share with discounts, which is why buyers who closed deals last year found dealers willing to move. FY27 reverses both halves of that. Volumes are rising, so the pressure to discount eases; margins are compressing on input costs, so the pressure to lift list prices builds. Our take, and it is a hedged one because ICRA is forecasting rather than reporting: the negotiating room that existed in FY26 narrows through FY27, and anyone holding out for a better quote is probably waiting in the wrong direction.
The squeeze will not land evenly across the range. Rupee depreciation bites hardest on machines with high imported content — larger excavators, high-spec hydraulics, imported engines — while deeply localised mass-market machines such as the backhoe loader are better insulated. Any pass-through is likely to be steeper at the top of the range than the bottom.
The demand drivers point at particular machine classes rather than the market as a whole. Jal Jeevan Mission work is pipeline trenching and reinstatement, which is backhoe and 7–21 tonne excavator duty. PMGSY work is rural road formation and surfacing, which is compaction and grading. Neither is mining-class demand. If you are sizing a fleet against this outlook, that is where the utilisation sits.
The export figure deserves its own read. Exports up 34 per cent against domestic up 14 per cent means Indian plants are shipping a growing share abroad, and export and domestic orders compete for the same production slots. On popular configurations, pin the quoted lead time down in writing rather than treating price as the only variable worth arguing about.
Financing is the one thing not tightening. ICRA holds credit profiles stable on strong cash accruals and limited external debt, so the binding constraint through FY27 looks like price rather than the availability of equipment finance.
What to watch
- List-price revisions in the October–December quarter, the usual window for passing input costs on.
- The monthly wheeled-CE retail prints, for whether July’s positive turn holds through the second half.
- Whether the CIE scheme is notified, since it changes the imported-content exposure ICRA flags.
- The rupee and steel, the two inputs sitting underneath the entire margin call.
Buying into FY27? Get the quote and the lead time in writing before the October–December price-revision window, and ask the dealer specifically what share of the machine’s content is imported. That is the part exposed to the rupee. Compare classes and specifications before you commit.
FAQ
Will construction equipment prices rise in FY27?
ICRA does not forecast prices, but it does forecast a 100–150 basis point margin squeeze driven by steel, logistics and imported component costs. Manufacturers absorbing that in a rising-volume year have less reason to discount than they had in FY26. Treat firm discounts as harder to come by rather than assuming an announced increase.
Is FY27 a better or worse year to buy than FY26?
On price, worse: FY26’s 2 per cent volume decline was the buyer-friendly half of the cycle. On availability and resale, arguably better, because a market growing 8–10 per cent supports utilisation and used values. The answer depends on whether your machine has work lined up.
Which machine classes does this outlook favour?
The schemes ICRA names, Jal Jeevan Mission and PMGSY, are trenching, compaction and grading work. That points at backhoe loaders, 7–21 tonne excavators, compactors and motor graders rather than mining-class machines.
Are these figures official industry data?
No. They are ICRA’s projections and company-stated observations for a 14-company sample, not a full-industry print. The monthly retail registration data and ICEMA’s quarterly figures remain the actual volume record.
Related on DesiMachines
Construction Equipment Sales August 2026: JCB’s Share Slips — the retail print behind the registration turn ICRA cites.
Source: The Hans India
Excavator
294 models 
Backhoe Loader
51 models 
Crane
68 models 
Concrete Mixer
79 models 
Wheel Loader
54 models 
Compactor / Roller
45 models 
Motor Grader
42 models 
Concrete Pump
66 models 
Skid Steer Loader
11 models 
Telehandler
13 models 
Dozer 
