The central government is considering expanding the ambit of a construction equipment localization scheme announced in the FY27 Union Budget to include components used to build port infrastructure and containers. According to reports from Mint, the scheme was originally designed to incentivize local manufacturing capacity of specialized construction equipment spare parts, with ₹200 crore allocated under the heavy industries ministry for FY27. However, it has not been notified yet. Construction equipment includes bulldozers, road rollers, tunnel-boring machines, excavators, backhoe loaders, crawler cranes, and asphalt pavers.
The scheme was likely to have an outlay of ₹14,300 crore over seven years, with 12-16% incentives for manufacturers on investments above ₹500 crore, as reported by Mint on 12 March. A government official confirmed that talks are ongoing on this matter, with a proposal being considered to widen the ambit of the construction equipment scheme to cover some port infrastructure components and even some parts used to build containers. Recent discussions between industry and policymakers have focused on whether there can be inclusion of components used in shipping and port infrastructure.
Both construction and port/shipping sectors require similar mechanical components due to shared operational requirements. According to Jagannarayan Padmanabhan, senior director and global head-consulting at Crisil Intelligence, construction equipment and equipment used on ports and ships share common mechanical and structural components as both sectors require components suited for high stress, heavy payloads and harsh weather conditions. Hydraulic components used in construction machinery like excavators as well as port-handling equipment such as ship-to-shore cranes and spreaders utilize identical pumps, valves, cylinders and hoses, while diesel engines, axles, gearboxes and transmission systems used in heavy earth-moving equipment are frequently adapted for harbour and dock vehicles.
India's rapid pace of urbanization and roadbuilding, backed by the government's highest ever annual budgetary capital expenditure outlay of ₹12.22 trillion for FY27, is generating considerable demand for construction equipment. According to the Indian Construction Equipment Manufacturers' Association (Icema), demand for construction vehicles rose as sales went up 3% in FY25 to over 140,000 units, with exports rising 10% year-on-year to 13,230 units in the same period. India currently has 12 major ports and 200 minor/intermediate ports, with the government targeting the development of additional port capacity under initiatives such as Maritime India Vision 2030 and Maritime Amrit Kaal Vision 2047.
The government has announced a ₹10,000 crore programme to step up domestic manufacturing of containers, which the extended scheme for construction equipment would also support. Additionally, India is looking to increase its shipbuilding capacity through the Shipbuilding Financial Assistance Scheme, the Shipbuilding Development Scheme and the Maritime Development Fund, under which the Union Cabinet approved funds of ₹70,000 crore. The government's Sagarmala programme aims to modernize ports, expand port capacity, improve multimodal connectivity and reduce logistics costs to support economic growth.
