India is preparing a $1.2 billion, seven-year incentive programme to build domestic capacity for high-value construction and infrastructure equipment, with the broader goal of reducing dependence on China. The proposal could attract about $1.8 billion in additional private investment.
What India is targeting The programme is expected to support domestic manufacturing of:
Tunnel boring machines (TBMs) — particularly important for metro, highway and tunnel projects
Fire-fighting equipment
High-rise elevators
Other technologically sophisticated construction and infrastructure machinery
A major focus is local value addition, meaning manufacturers would need to progressively source more components and technology within India rather than simply assembling imported machines.
Why China is central to the strategy India’s dependence on imported TBMs has become a strategic vulnerability. Chinese suppliers have been important providers of tunnelling and boring equipment, while trade and geopolitical tensions have demonstrated how equipment supply can be disrupted.
Chinese tunnelling-machinery imports into India fell from about $18 million in FY2022-23 to $3 million in FY2023-24, then to $500,000 in FY2024-25 and $800,000 in FY2025-26.
So the policy isn’t simply about replacing Chinese excavators or cranes. It is aimed at building domestic capability in complex, high-value machinery that India currently cannot produce at sufficient scale or technological depth.
Companies positioned to benefit Potential beneficiaries include BEML, which is pursuing domestic TBM manufacturing, as well as Larsen & Toubro and Johnson Lifts.
The opportunity is significant because India’s construction and infrastructure equipment market is estimated at roughly $10.5 billion and is expected to expand alongside spending on roads, metros, airports and other infrastructure.
What this means for the heavy-equipment industry This could mark a significant shift from India as an equipment importer to India as a manufacturing base.
The biggest opportunity may be further down the supply chain: engines, hydraulics, transmissions, electronics, control systems, cutting tools, undercarriages and other specialised components. If the incentive programme succeeds, Indian suppliers could gradually capture a larger share of these components while international manufacturers establish local production partnerships.
For mining and construction-equipment investors, the key takeaway is that India’s $1.2 billion programme is less about subsidising individual machines and more about creating an indigenous heavy-equipment ecosystem.
