India plans sops to cut import dependence in construction equipment

NEW DELHI: The Centre is considering a 12–16% incentive on large investments to boost domestic manufacturing of construction equipment such as tunnel boring machines, cranes and crawlers, two people familiar with the discussions said.The proposal is part of the scheme for enhancement of construction and infrastructure equipment (CIE) announced by finance minister Nirmala Sitharaman in her FY27 budget speech on 1 February.

The budget allocated ₹200 crore for the scheme to be implemented by the ministry of heavy industries.Under the current plan, companies investing more than ₹500 crore in construction equipment manufacturing could receive the proposed incentives, according to the people cited above, who requested anonymity.This development comes at a time when India's ₹12.2 trillion capex bonanza—three times FY20 levels—supercharges demand for roads, rails and mining equipment, yet persistent imports of critical components hobble self-reliance.The scheme is being designed with a ₹14,300 crore corpus over seven years, including two years for investments to be made and five years of incentive payouts, one of the people said.The government is considering a structure of 16% incentives for the first three years, followed by 14% in the fourth year and 12% in the fifth year, the person added.Manufacturers of construction equipment components investing more than ₹200 crore may also qualify for the incentives, the second person said.Mint had earlier reported in November 2025 that the ministry of heavy industries had begun consultations with the construction machinery sector for an incentive-based scheme.The proposed scheme will focus on import substitution and domestic manufacturing of high-quality spare parts, the second person