The ministry of heavy industries (MHI) has proposed a Rs 13,000-crore incentive scheme for the construction equipment sector with the aim of strengthening domestic manufacturing and reducing import dependence. The scheme is under discussion with key ministries and is expected to be taken up for Cabinet approval in the coming months, officials told Fe.
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Sources said that MHI has circulated a concept note to the ministries of finance, mines, commerce and industry, and new and renewable energy, as well as to Niti Aayog, seeking inputs before the proposal is finalised. The initiative is positioned as part of the government’s broader plan to build a competitive domestic ecosystem for critical machinery required in infrastructure development.
Focus on High-Value Equipment
The proposed scheme will target high-value equipment such as tunnel boring machines (TBMs), ropeway systems, backhoe loaders, tower cranes, crawler cranes, engines and transmissions. TBMs are essential for metro networks, highways and utility tunnels, while ropeway systems are increasingly being deployed for both urban mobility and tourism projects in hilly areas. Backhoe loaders, widely used in construction and agriculture, along with cranes for large infrastructure projects, are also part of the list.
Officials said that the scheme will mandate a minimum of 50% domestic value addition for manufacturers to qualify for incentives. This requirement is intended to address a long-standing challenge in the industry, which remains dependent on imported components such as engines, sensors, control systems and specialised steel alloys. At present, many domestic firms operate largely as assemblers, relying heavily on supplies from China and other countries.
Boost for Industry and Infrastructure Push
The scheme is designed as a performance-linked incentive programme, under which manufacturers will be rewarded based on production levels and incremental output. The approach is expected to encourage not only higher volumes but also greater focus on quality and innovation.
Leading industry players including JCB India, Action Construction Equipment (ACE), Ashok Leyland, Cummins India and Tata Hitachi are expected to benefit from the incentive scheme. For these firms, the proposal could mean fresh investment in expanding capacity, setting up component supply chains and developing advanced machinery locally. The initiative could also attract new entrants into the domestic construction equipment market,
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