Indian Construction Equipment Industry Gears Up for Stage V Emission: ICRA
India’s construction equipment vehicle (CEV) industry, which has grown at a robust 12% CAGR between FY2015 and FY2024, is set for significant transformation. With the Government of India implementing CEV Stage V emission norms from January 1, 2025, the industry will align with global standards in emissions and safety systems.
CEV Stage V norms will apply to wheeled equipment, which accounts for 65-70% of industry volumes, covering a wider range of engines, including those under 37 kW and over 560 kW. The regulations introduce stringent particulate matter (PM) and particle number (PN) emission limits, necessitating the adoption of diesel particulate filters (DPFs) by manufacturers. Non-wheeled equipment used in off-road applications remains outside the scope of these norms.
In addition to emission standards, new safety requirements under AIS-160 and stricter noise levels for operators and pass-by vehicles will be enforced. These include structural changes like roll-over protective structures (ROPS), tip-over protective structures (TOPS), and falling-object protective structures (FOPS), which are expected to increase equipment costs significantly.
According to ICRA, these regulatory changes could result in a 12-15% rise in CEV prices, with costs passed on to customers over 12-18 months. The impact will be more pronounced for equipment transitioning directly from Stage III to Stage V (12-15%+), compared to those moving from Stage IV to Stage V (4-6%).
Pre-buying is anticipated to peak in Q1 FY2026, with FY2026 volume growth driven by continued government capital expenditure on infrastructure and timely project awards. While the cost increase may affect affordability in the near term, the benefits of improved safety, operator comfort, and enhanced export potential to developed markets are expected to outweigh the challenges.
