NEW DELHI: The mining and construction equipment industry may see an 8-10 per cent year-on-year (Y-o-Y) recovery in volumes to 150,000 units in 2026-27 (FY27), after a 2 per cent decline in FY26, rating agency ICRA said on Monday.
However, higher input and logistics costs because of west asia crisis are expected to weigh on the operating margins of large players.
Operating margins for ICRA’s sample of 14 large mining and construction equipment players are projected to moderate by around 100-150 basis points (bps) to 6-8 per cent in 2026-27, from 8.4 per cent in 2025-26.
The pressure is expected to come from higher steel prices, elevated logistics costs and rising costs of imported components amid the rupee depreciation, ICRA said.
“Stiff competition and limited pricing flexibility could constrain the pass-through of this cost inflation,” it said.
The recovery in the industry is already visible, with domestic volumes rising 14 per cent Y-o-Y and exports increasing 34 per cent in the first five months of the current financial year.
The growth is being driven by domestic demand, with local sales contributing to over 80% of volume and around 85-90 per cent of equipment purchased is financed, according to ICRA.
The turnaround has been led primarily by the earthmoving segment, with backhoe loaders and crawler excavators together accounting for more than 90 per cent of sales.
Backhoe loader volumes rose 11 per cent Y-o-Y in the first five months of the current financial year. It was driven by improved project execution and higher infrastructure spending.
Excavator volumes, meanwhile, rose 4 per cent in 2025-26 and a further 17 per cent Y-o-Y in the current financial year, supported by sustained mining activity and increasing adoption of specialised equipment, including mini excavators.
Other segments have shown mixed trends. Material handling equipment volumes declined 10 per cent in 2025-26 but rebounded 40 per cent in the first five months of the current financial year, backed by demand for pick-and-carry cranes.
Road equipment volumes, however, declined 5 per cent in 2025-26 and a further 4 per cent Y-o-Y in the current financial year.
This came amid subdued project awarding by the National Highways Authority of India (NHAI) and the Ministry of Road Transport and Highways (MoRTH).
Government capital expenditure surged nearly 30 per cent in the first four months of the current financial year, while mining and construction equipment retail registrations turned positive in July 2026.
ICRA expects momentum to build through the year, supported by the government’s ₹12.2 trillion capital expenditure push, higher allocations for the Jal Jeevan Mission and Pradhan Mantri Gram Sadak Yojana, and the higher infrastructure funding for states, among others.
Exports have also emerged as a key growth driver for the industry. They rose 30 per cent Y-o-Y in 2025-26 and a further 34 per cent in the first five months of the current financial year. This was supported by improved emission compliance, cost competitiveness and original equipment manufacturer (OEM)-led diversification. Export volumes’ share nearly doubled to around 17 per cent during the period from around 9 per cent in 2024-25.
Earthmoving equipment accounted for around 75 per cent of exports, led by backhoe loaders, crawler excavators and skid steer loaders.
The US remained the largest export destination, accounting for around 15 per cent of exports, followed by Africa at 7 per cent, Saudi Arabia at 5 per cent and the United Arab Emirates (UAE) at 4 per cent.
Shipments to the US have started recovering after tariff moderation, while free trade agreements with the UK, EU, Australia, New Zealand and the UAE are expected to open additional opportunities.
ICRA expects the 14 large mining and construction equipment players in its sample to report 11-13 per cent YoY revenue growth in 2026-27, following a flat performance in 2025-26. The growth is expected to be supported by volume recovery, continued export momentum, modest price hikes and a favourable product mix.
Despite the expected margin pressure, ICRA said the credit profile of original equipment manufacturers is likely to remain stable in 2026-27, supported by strong cash accruals, limited external debt and healthy coverage indicators. It maintained a stable outlook on the Indian mining and construction equipment industry.
Source: Business Standard
