Domestic Demand Remains a Concern for CE Industry with ~10% Degrowth in Domestic Sales in YTD FY26; Exports Expand Sharply: ICEMA

The Indian Construction Equipment (CE) industry faced domestic demand headwinds in the FY 2025-26 with sales remaining subdued. The industry however saw strong export performance during this period. The CE Industry has expectations of faster awards of Government projects and higher infrastructure capital expenditure in the upcoming Union Budget, thus fuelling optimism.

According to the latest industry data reported by ICEMA (Indian Construction Equipment Manufacturers Association), domestic CE sales saw a degrowth of around 10% from 89,244* units in YTD FY (Year till date of Financial Year) 2024-25 to 81,566* units in YTD FY 2025-26 (Apr –Dec 2025), reflecting slower infrastructure activity, project execution challenges, unavailability of finance and near term subdued demand in key segments. Exports, however, surged strongly, reinforcing India’s competitiveness in international markets.

In Q3 FY26, as per the data collated by ICEMA, total CE sales including domestic sales, OEM exports and unauthorised exports, stood at 35,891 units — a 9% YoY decline compared with Q3FY25, highlighting ongoing demand challenges. Earthmoving equipment with largest share recorded 25,715 units, registering a decline of 9 % from Q3 previous financial year. The total sales of Material Handling Equipment was 4,306 units, witnessing degrowth of 10% YoY for Q3FY. Concrete equipment sales stood at 3,335 units, declining by 9% YoY. Road Construction equipment reported 1,942 units, with a decrease of 7% YoY. Material Processing Equipment accounted for 593 units, decline by 1% from Q3FY25. While domestic sales reduced by 10%, exports grew by 28%, cushioning the overall industry decline to 5% in the first nine months of FY26 with total 94,035 units compared to 98,977 units in YTD FY25, , indicating robust overseas demand and market diversification. There is a de-growth of the industry despite the presence of unauthorised exports in the reported numbers, and if we take out those then the decline in the industry is even more severe. The unauthorised exports has been a major concern for the industry mainly for backhoe loaders and excavators, wherein the equipment is sold by OEM in domestic market and is exported without information to OEM and Finance companies, posing a loan repayment default risk to Finance companies.

Despite ongoing challenges, industry emphasises that a meaningful revival will depend on expediting project contract awards in various Infra segments like Roads & Highways, Railways and others, faster on ground execution, timely fund disbursements, and a supportive policy environment to restore buyer confidence and sustain investment momentum in the coming quarters. Industry is also looking forward to Government support to migrate supply chains to India for an Atmanirbhar Bharat approach for a foundational industry such as CE which fuels the infrastructure development in the country.

Deepak Shetty, President, ICEMA and CEO & Managing Director, JCB India Ltd., shared “The domestic demand for YTD FY 25-26 has remained muted. The growth of our industry is significantly dependent on infrastructure development projects where we experienced some headwinds. This was also a period of adjustment for customers after the CEV Stage V emission standards came into effect, which impacted the asset value of our products. As the industry adapts the new emission norms, export competitiveness is expected to strengthen with new geographies opening up as export destination for India. However, at a broader level we remain hopeful of domestic demand coming back as infrastructure development is a consistent focus area for the Government, particularly Rural Infrastructure, which is a key growth driver for our Industry. The Indian CE Industry is the 3rd largest industry in the world, employing more than 3 million people directly & indirectly and plays an important role in employment generation and nation building.”

Ramesh Palagiri, President Designate, ICEMA and Managing Director & CEO, Wirtgen India Pvt. Ltd., stated, “Although domestic demand has been impacted by slower project awarding and execution, we are optimistic of a turnaround. With strong export performance and the hope of front-loaded awarding of projects and higher infrastructure capex in the upcoming Budget, we believe domestic CE demand will strengthen and contribute to a sustained industry recovery in 2026.”

Vivek Hajela, Convener, ICEMA Industry Analysis & Insights Panel and Executive Vice President & Head, Construction & Mining Machinery Business — L&T Construction & Mining Machinery, Larsen & Toubro, added “While execution pace & contract award in road construction has moderated due to land acquisition and approval delays, the underlying pipeline of projects remains healthy with significant sanctioned projects and improved awarding activity. With streamlined processes and focused execution, we expect this to translate into stronger domestic CE demand in the coming months as infrastructure progress accelerates”.

Prepared by the ICEMA Industry Analysis & Insights Panel, the report is based on data collated from OEM members representing around 95% of India’s CE industry, ensuring comprehensive and credible insights for policymakers and industry stakeholders.