India’s Mining and Construction Equipment Industry Aims for Growth and Localisation
The mining and construction equipment (MCE) industry in India is on the verge of significant growth. According to a report by ICRA, localisation levels are expected to rise to 70-80% in the next 5-7 years. This shift could save the industry nearly USD 3 billion in foreign exchange annually and enhance India’s cost competitiveness, boosting its export potential.
The MCE industry, driven by India’s infrastructure-led growth, has grown at a compound annual growth rate (CAGR) of 12% over the past decade, reaching 1.36 lakh unit sales in FY2024. Projections suggest the industry could become a USD 25 billion market by 2030.
ICRA highlights the need for a strong supply chain ecosystem to achieve the industry’s Vision 2030, which aims to make India the world’s second-largest MCE market and a global hub for manufacturing and exports. The government’s Production Linked Incentive (PLI) scheme and the China+1 strategy are encouraging domestic production and investment in India.
Currently, the MCE industry relies heavily on imports, with approximately 50% of components sourced from countries like China, Japan, and Germany. However, increased localisation is expected to reduce this dependency.
Doubts Revealed
Localisation -: Localisation means making more products or parts within India instead of buying them from other countries. This helps save money and creates jobs in India.
Foreign exchange -: Foreign exchange is the money that India uses to buy things from other countries. By making more equipment in India, the country can save this money.
CAGR -: CAGR stands for Compound Annual Growth Rate. It shows how much an industry or business is growing each year, on average.
Geopolitical shifts -: Geopolitical shifts are changes in the way countries interact with each other. These changes can affect trade and business between countries.
Supply chain -: A supply chain is a system of people, activities, and resources involved in making and delivering a product. A strong supply chain means everything works smoothly from start to finish.
