FCC

Union Budget 2026–27 Marks a Milestone for Construction Equipment Manufacturing

2026-02-02

The Indian Construction Equipment Manufacturers Association (ICEMA) congratulates the Government of India on the announcement of a forward-looking Union Budget 2026–27 that reinforces infrastructure as the backbone of India’s economic growth and manufacturing competitiveness. The announcement of a dedicated incentive scheme for the Construction and Infrastructure Equipment (CIE) sector marks a transformational milestone for the industry and fulfils a long-standing demand of ICEMA to strengthen domestic manufacturing and global competitiveness.

The increase in public capital expenditure to Rs 12.2 trillion, along with the focus on dedicated freight corridors, high-speed rail corridors, national waterways and coastal logistics, will significantly improve connectivity, reduce logistics and transportation costs and accelerate large scale infrastructure project execution across the country. These initiatives will directly benefit the construction and manufacturing sectors by creating a more resilient and cost-efficient project ecosystem.

ICEMA particularly welcomes the proposal of a scheme for Construction and Infrastructure Equipment (CIE) industry to strengthen domestic manufacturing of high-value and technologically advanced construction and infrastructure equipment. The industry required the government support to migrate global supply chains to India, in line with the Atmanirbhar Bharat vision, particularly for a foundational sector like construction equipment that underpins national infrastructure development.

The scheme will support high-technology manufacturing by encouraging investments in advanced production systems, automation and precision engineering. It will support the development of a strong construction equipment ecosystem in India, enabling the creation of a globally competitive supplier base and significantly improving domestic competitiveness through localisation of high-precision components. With improved manufacturing capability, the scheme will help localisation and reduce dependence on imports—especially of critical components, which will further strengthen supply chain resilience.

Availability of locally manufactured affordable equipment will help bring down overall infrastructure project costs while generating large-scale employment. These jobs will be created not only across construction equipment OEMs but also across their extensive supplier and service networks, strengthening the entire manufacturing value chain. ICEMA looks forward to continued collaboration with the Government to support India’s infrastructure ambitions and strengthen India’s construction and infrastructure equipment manufacturing sector.

Commenting on the Budget, Deepak Shetty, President, ICEMA and CEO & MD, JCB India, said: “The Government’s sustained focus on infrastructure development, combined with the scheme for construction and infrastructure equipment manufacturing, is a decisive step toward building a globally competitive, high-technology manufacturing ecosystem in India. The emphasis on high-precision components, localisation and advanced capabilities will strengthen domestic competitiveness, enhance India’s export competitiveness, reduce import dependence and lower infrastructure project costs, while creating employment across the value chain.”

“The Union Budget’s continued emphasis on infrastructure is a strong signal of confidence in India’s growth story and will help revive domestic demand for construction equipment at a time when the industry has been facing a slowdown. The announcement of an incentive scheme for construction and infrastructure equipment manufacturing further strengthens this momentum by supporting domestic capacity and technology adoption. Together, these measures will create long-term growth for the sector and reinforce the foundation of India’s infrastructure-led economic development,” said Ramesh Palagiri, President Designate, ICEMA and Managing Director & CEO, Wirtgen India.

“The Union Budget, with its focus on strengthening construction and infrastructure equipment manufacturing, becomes even more powerful when viewed alongside the India–EU Free Trade Agreement, often described as the ‘mother of all trade deals.’ While the FTA will open access to global markets and advanced technologies, the CIE incentive scheme will anchor manufacturing and localisation in India. Together, they create a compelling growth package that encourages global investment, strengthens supply chains, and positions India as a global hub for high-tech construction equipment,” said Shalabh Chaturvedi, Vice President, ICEMA and Managing Director – India & SAARC, CASE Construction Equipment India.

“The Union Budget is highly encouraging for both the construction equipment and precision component manufacturing sectors. The budget proposals provide a strong opportunity for developing high-precision components in India such as hydraulics, high-capacity engines, transmission systems, undercarriage parts and other critical sub-systems that are currently largely imported. Local manufacturing of these technologies will help construction equipment OEMs improve localisation levels, lower production costs and enhance global competitiveness," said Sitaram Ganeshan, Treasurer, ICEMA and President – Wipro Hydraulics, Wipro Infrastructure Engineering.