India mining, construction equipment volumes seen rising up to 10 pc in FY27: Report

India’s mining and construction equipment (MCE) industry is expected to return to growth in 2026-27, supported by stronger domestic demand and a sharp increase in exports, according to a report by ICRA.

The rating agency expects the recovery to follow a 2% decline in MCE volumes during 2025-26. Early indicators already point towards improving market conditions, with domestic MCE volumes increasing 14% year-on-year during the first five months of the current fiscal. Exports grew at an even faster pace, rising 34% during the same period.

Government spending on infrastructure has also provided support to the sector. Capital expenditure by the government increased by nearly 30% during the first four months of the fiscal, while retail registrations of MCEs turned positive in July, indicating an improvement in demand.

“The recovery is expected to be supported by the government's Rs 12.2 lakh crore capital expenditure programme, increased allocations for the Jal Jeevan Mission and Pradhan Mantri Gram Sadak Yojana, higher infrastructure funding for states and the proposed CIE scheme to deepen domestic manufacturing and localisation,” said Suprio Banerjee, Vice President and Co-Group Head, Corporate Ratings, ICRA.

ICRA expects revenue among its sample of 14 large MCE companies to increase by 11-13% in 2026-27. This would mark a significant improvement from the previous fiscal, when revenues remained broadly flat.

However, profitability is likely to remain under pressure. Operating margins are projected to decline by around 100-150 basis points, falling to approximately 6-8% from 8.4% in 2025-26.

The expected margin compression is linked to higher input and operating costs, particularly for steel, logistics and imported components. Depreciation in the rupee is also expected to add to cost pressures for manufacturers that rely on imported components.

Despite the anticipated pressure on margins, ICRA expects the credit profiles of equipment manufacturers to remain stable. Strong internal cash generation, relatively limited dependence on external debt and healthy debt-coverage indicators are expected to provide support.

ICRA has therefore maintained a stable outlook for the Indian MCE industry, with infrastructure spending, improving domestic demand and rising exports expected to remain key drivers of the sector’s performance in the coming fiscal.