India is set to approve a proposed $1.2 billion incentive scheme aimed at strengthening domestic manufacturing of high-value and technologically advanced construction and infrastructure equipment. According to government sources cited by Reuters, the proposed programme would provide incentives over seven years and is expected to attract approximately $1.8 billion in fresh private investment. The plan is designed to reduce India's dependence on imported machinery and build greater domestic capability in specialised construction equipment.
The proposed scheme comes as India continues to expand investment in infrastructure projects, including metro rail systems, highways, airports and other large-scale construction programmes. While demand for construction machinery has grown alongside this infrastructure expansion, the country remains dependent on overseas suppliers for several categories of sophisticated equipment. The proposed incentive programme is intended to address this gap by making domestic manufacturing more commercially viable.
Among the key equipment categories expected to benefit are tunnel boring machines (TBMs), firefighting equipment and elevators used in high-rise buildings. TBMs are particularly important because they are used for underground construction associated with metro rail, highways and other major infrastructure projects. India currently relies heavily on imported TBMs, with China being one of the important suppliers of tunnelling and boring machinery.
The proposed programme would also introduce local value-addition targets for machinery that is currently fully or largely imported. This could encourage manufacturers to develop domestic supply chains for components, technology and specialised systems rather than relying primarily on imported finished equipment. Over time, higher local value addition could help Indian manufacturers build technical capabilities and compete more effectively in both domestic and international markets.
The government's renewed focus on construction equipment manufacturing also comes against the backdrop of supply-chain concerns involving China. Reuters reported that China had introduced restrictions affecting exports of tunnel boring machines to India, including delays in customs clearances during 2024. India's imports of tunnelling machinery from China fell from $18 million in 2022-23 to $3 million in 2023-24, then declined further to $500,000 in 2024-25, before rising to approximately $800,000 in 2025-26.
The proposed incentives could create opportunities for Indian companies already developing capabilities in advanced construction equipment. Reuters and other reports identified companies such as BEML, Larsen & Toubro and Johnson Lifts as potential beneficiaries, although the final structure and eligibility criteria of the scheme have not yet been officially announced. BEML, for example, has plans to manufacture tunnel boring machines domestically.
The scale of the proposed programme reflects the growing importance of India's construction and infrastructure equipment sector. The market is currently valued at around ₹1 lakh crore, or approximately $10.5 billion, according to reports citing the government sources. Continued infrastructure spending is expected to support demand for machinery across road construction, metro development, airports and other major projects.
For India's construction equipment industry, the proposed initiative could represent an important shift from relying on imported high-value machinery toward developing stronger domestic manufacturing capabilities. Increased investment in research and development, engineering, component manufacturing and technology could help Indian companies move into more sophisticated equipment categories.
However, the scheme has not yet been formally approved or finalised. The reports published on August 21, 2026, said a final decision was expected soon, while India's Heavy Industries Ministry and Finance Ministry had not responded to requests for comment at the time of reporting. Therefore, the $1.2 billion figure, seven-year duration and $1.8 billion investment target should currently be treated as proposed figures rather than an officially implemented programme.
If approved in the reported form, the initiative could become a significant development for India's construction equipment ecosystem, supporting local manufacturing, encouraging investment in advanced technologies and potentially reducing supply-chain vulnerabilities in critical infrastructure machinery. For equipment manufacturers, component suppliers and infrastructure companies, the proposed policy could also create new opportunities as India seeks to build a more capable and competitive domestic construction-equipment industry.