Indian Mining And Construction Equipment Sales Expected To Decline In FY2025

After witnessing robust growth over the past two years, the domestic mining and construction equipment (MCE) industry in India is poised to experience a decline in sales volumes in the fiscal year 2025 (FY2025). 

According to ICRA, following a remarkable 26 per cent growth in FY23 and 24 per cent  in FY2024, the industry is expected to face a 12 to 15 per cent decline in sales in FY25, projecting volumes of 1.14-1.18 lakh units for the fiscal year.

This reversal in growth trajectory is primarily attributed to a slowdown in new project awards, particularly in the fourth quarter of FY2024 and the first quarter of FY2025, as the Model Code of Conduct remains enforced during the Parliamentary Elections held in April-May 2024.

Ritu Goswami, Sector Head of Corporate Ratings at ICRA, highlighted that the project awarding activity has witnessed disruption in the past two quarters. The pre-election push for project execution by the government had fueled strong demand momentum for the MCE industry in the preceding years. However, with the anticipated disruption in project award activity for two consecutive quarters, coupled with the impact of monsoon-related disruptions on construction activities in the second quarter, the first half of FY2025 is anticipated to witness a moderation in sales.

Nevertheless, ICRA anticipates a rebound in sales volumes in the second half of FY2025, driven by a resurgence in new project awards commencing from the third quarter. Additionally, the transition to the Construction Equipment Vehicles (CEV-V) emission norms in January 2025 is expected to contribute to a partial pre-buying effect, further supporting sales.

Despite the near-term challenges facing the domestic MCE demand environment, the industry's long-term prospects remain promising, buoyed by the government's sustained focus on infrastructure development. The continued commitment to infrastructure projects provides a strong foundation for the industry's growth trajectory beyond the immediate downturn.

As the MCE sector navigates through the temporary headwinds, stakeholders are closely monitoring government initiatives and market dynamics to capitalise on emerging opportunities and foster resilience in the face of evolving economic conditions.