India to incentivise local manufacturing of construction equipment
India is considering a 12% to 16% incentive to encourage companies to build construction equipment like tunnel boring machines and cranes locally.
Announced in the fiscal 2027 budget by Finance Minister Nirmala Sitharaman, the plan comes with a ₹200 crore fund and targets firms investing more than ₹500 crore.
The big goal? Rely less on imports as India ramps up its infrastructure spending.
Incentives will be linked to domestic value addition
To qualify for incentives, companies must meet localisation requirements of 30-50% domestic value addition and satisfy investment thresholds (for example, equipment manufacturers investing more than ₹500 crore or component manufacturers investing more than ₹200 crore).
The highest incentive, 16%, is for the first three years, 14% in the fourth year, and 12% in the fifth year.
Even though some equipment is already made here, India still imports high-tech parts like hydraulic assemblies from countries like China and Germany due to tech gaps.
This move aims to close that gap and boost local manufacturing as demand for new infrastructure keeps growing.