In the next five years, the mining and construction equipment sector in India is expected to grow by 70–80%: ICRA

INN/New Delhi, @Infodeaofficial

According to a survey by ICRA, the mining and construction equipment (MCE) sector in India is likely to grow significantly, with localisation levels predicted to rise to 70–80% in the next five to seven years.

It further stated that this adjustment might increase India’s cost competitiveness and help the sector save over USD 3 billion in foreign exchange annually, both of which would increase export potential.

Riding on the back of infrastructure-led expansion in India, the MCE market has risen at a compound annual growth rate (CAGR) of 12% over the last ten years (FY2015-FY2024), reaching 1.36 lakh unit sales in FY2024, according to ICRA.

It further stated that estimates indicate that by 2030, the industry will reach a valuation of USD 25 billion. “With a potential of becoming a USD 25 billion market in annual revenues, this could mean approx. USD 3 billion in forex savings annually” stated ICRA.

The ICRA pointed out that building a robust supply chain ecosystem will be necessary to meet this goal. The MCE industry’s Vision 2030, which seeks to position India as the second-largest MCE market in the world and a hub for manufacturing and exports, cannot be realised without a strong supply chain.

It went on to say that a number of factors are bolstering the push for increased localisation. Domestic production is being stimulated by the government’s Production Linked Incentive (PLI) program for industries including speciality steel and auto components. Furthermore, the change in the geopolitical landscape of the world, along with OEMs’ adoption of the China+1 strategy, is driving increased investment in India.

Broadly speaking, the Indian government is working to make doing business easier and is concentrating on improving infrastructure to draw in investments, which would increase the competitiveness of the country’s manufacturing sector.

Presently, the MCE sector exhibits a significant reliance on imports, with around 50% of its component value coming from OEMs situated in China, Japan, South Korea, Germany, and other countries. Speciality steel is one of the essential raw materials that the sector imports.