Indian construction sector to grow by 6-8% in FY26

New Delhi: India’s construction equipment sector's revenue is set to rise 6-8 per cent in current fiscal (FY26) driven by selective price hikes, firm export realisations and stable steel prices, a report said on Thursday.

Strong overseas orders provide crucial support to this sector amid subdued domestic demand and higher equipment costs, according to the report from Crisil Ratings. Selective price hikes will partly offset higher compliance costs, said the ratings agency, adding that firm export realisations and stable steel prices will help mitigate pricing pressure from low-cost imports.

This will limit the contraction in operating margin to 11 per cent from around 12 per cent last fiscal and keep credit metrics stable across manufacturers, the report mentioned.

India’s construction equipment industry will continue to clock a volume growth of 2-4 per cent this fiscal and the next, the firm said.

Crisil’s review of 17 leading manufacturers in the sector found that a 35 per cent jump in exports in the first half of FY26 provided a key buffer against softer domestic demand.

“Faster project awards and execution in the remainder of this fiscal will be crucial for completion of Rs11 lakh crore infrastructure outlay. Moreover, sustained high infrastructure outlay and enhanced private capex will be essential to revive domestic demand next fiscal,” said Anuj Sethi, Senior Director, Crisil Ratings.

“The industry is set to gain global traction with the rollout of CEV-V norms in January 2025, aligning domestic equipment with international standards," said Poonam Upadhyay, Director, Crisil Ratings.

While compliance to CEV V1 emission norms has raised costs by 12-15 per cent, it has enhanced product reliability and acceptability driving demand from Africa and Latin America.

The new norms open access to advanced markets such as Europe, North America and Japan, where cost efficiency and compliance are critical, the report noted.