Indian Mining & Construction Equipment Sales Volume to Fall in FY25: ICRA
ICRA now projects a 5-7% decline in sales volume for the Indian mining and construction equipment (MCE) industry in FY2025, a more positive outlook compared to the earlier forecast of a 12-15% drop. This revision follows better-than-expected domestic sales in the first half of FY2025, which saw a 2% year-on-year increase despite a slowdown in infrastructure activities due to the General Elections and monsoon impact.
The adjusted estimate reflects customers’ optimism about ongoing policy support for infrastructure development. However, challenges like slow project awarding and tighter financing conditions could limit demand in the second half of the fiscal year.
Ritu Goswami, Sector Head, Corporate Ratings, ICRA, said, “The project awarding activity in the road segment (the major driver for domestic MCE sales) has remained weak during the last 15-18 months. While a surge in the Government capex is expected in H2 (given the pending budgetary outlay), ICRA estimates that the annual awarding by the Ministry of Road Transport and Highways (MoRTH) in FY2025 to be similar to the level of FY2024 and significantly lower than FY2021-FY2023 levels. Given the lead time between project awarding and commencement of work, equipment purchasing by road developers may be deferred till next year. Demand from other user industries will only partly offset this gap. Additionally, tight financing scenario by way of lower loan to value ratio, greater scrutiny of loan applications or higher loan rejections may result in deferral of new equipment purchase by first-time (retail) buyers and constrain offtake for the full year.”
Road construction accounts for 35-45% of MCE sales in India, followed by mining (20-30%), real estate (10-20%) and other sectors (railways, water supply, power etc.). In H1 FY2025, the growth in domestic sales was driven by the earthmoving and material processing equipment segments, which saw a 5% and 1% YoY growth, respectively. Road construction (-9%), material handling (-7%) and concreting equipment (-4%) segments reported a decline in volumes in H1 FY2025 on a YoY basis.
