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India's MCE industry set for 70-80% expansion in 5 years: ICRA
Industry News- Oct 14,24
The MCE industry, driven by the country’s infrastructure-led growth, has already witnessed a compound annual growth rate (CAGR) of 12% over the past decade (FY2015-FY2024), reaching 136,000 unit sales in FY2024.
India’s mining and construction equipment (MCE) industry is set for significant growth, with localisation levels expected to rise to 70-80% within the next 5-7 years, according to a report by ICRA. This shift towards domestic production could help the sector save approximately $3 billion annually in foreign exchange while improving India’s cost competitiveness and export potential.
The MCE industry, driven by the country’s infrastructure-led growth, has already witnessed a compound annual growth rate (CAGR) of 12% over the past decade (FY2015-FY2024), reaching 136,000 unit sales in FY2024. ICRA projects the market to reach $25 billion in annual revenues by 2030.
“Achieving a $25 billion market could translate into nearly $3 billion in annual forex savings,” the report added.
However, meeting these goals will require building a robust supply chain ecosystem, which is essential to achieving the industry's Vision 2030 of positioning India as the world’s second-largest MCE market and a global manufacturing and export hub.
The report highlighted that several factors are contributing to increased localisation. Government initiatives like the Production Linked Incentive (PLI) scheme, which supports sectors such as specialty steel and auto components, are boosting domestic production. Furthermore, geopolitical shifts, including the China+1 strategy adopted by original equipment manufacturers (OEMs), are encouraging additional investments in India.
The Indian government is also focusing on improving the ease of doing business and investing in better infrastructure to attract investments, further strengthening the competitiveness of domestic manufacturing.
Currently, the MCE industry is heavily reliant on imports with nearly 50% of components (by value) sourced from countries like China, Japan, South Korea, and Germany. Key raw materials such as specialty steel are also primarily imported, highlighting the need for a well-developed local supply chain to support the industry’s future growth.
(ET)
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