India to approve $1.2 billion incentives for domestic advanced construction equipment

India is preparing a major incentive programme to strengthen domestic manufacturing of high-value construction and infrastructure equipment, with the government likely to approve a $1.2 billion scheme soon. The initiative is aimed at reducing the country’s dependence on imports, particularly from China, for technologically advanced machinery.Under the proposed seven-year programme, manufacturers could receive incentives designed to attract around $1.8 billion in fresh investments. The scheme is expected to cover equipment such as tunnel boring machines (TBMs), firefighting systems and elevators used in high-rise buildings.Action Construction Equipment Reports 22.28% Consolidated Net Profit Rise To ₹119.49 Crore In Q1 FY27 Focus on reducing import dependenceIndia continues to rely heavily on imported tunnel boring equipment for large infrastructure projects, including metro rail networks, highways and other construction works. China has traditionally been an important supplier of such machinery.The proposed scheme is being designed after assessing the level of support manufacturers would require to make domestic production commercially viable. It could benefit companies such as state-owned BEML, which has plans to manufacture tunnel boring machines locally, as well as equipment makers including Larsen & Toubro and Johnson Lifts.The programme is also expected to include targets for increasing local value addition, particularly for machinery that is currently imported almost entirely. Rising infrastructure spending creates opportunityThe proposed incentives come as India accelerates spending on roads, metro systems, airports and other infrastructure. The country’s construction and infrastructure equipment market is estimated at around ₹1 trillion, or approximately $10.5 billion, and is expected to expand further.India’s dependence on Chinese machinery has remained a concern since the 2020 border clashes between the two countries, after which New Delhi introduced restrictions on Chinese investments and participation in public procurement.China also imposed export-related restrictions on tunnel boring machines in 2024 by delaying customs clearances for shipments to India. Imports of tunnelling machinery from China subsequently declined sharply.

India plans a $1.2 billion incentive scheme for advanced equipment manufacturing. This initiative aims to reduce reliance on China for critical machinery. The government expects fresh investment and domestic production growth over seven years. The scheme will cover tunnel boring machines and fire-fighting equipment. This move supports India's growing infrastructure development needs.

NEW DELHI: India is set to approve a $1.2-billion incentive ​scheme for the making of high-value, ​technologically sophisticated construction and infrastructure equipment, two government sources said, in a bid ​to reduce dependence on China for critical machinery.The scheme, which is expected to be finalised soon, aims to draw $1.8 billion in fresh investment by offering incentives over seven years to domestic manufacturers of equipment including tunnel boring machines, ‌fire-fighting equipment and ⁠elevators used ⁠in high-rise buildings, one of two the sources said.India remains heavily dependent on imported tunnel boring machines, with China among ​the key suppliers of tunnelling and other boring equipment used in metro rail and highway construction, underscoring the ​country's long-standing struggle to build domestic manufacturing capacity.The government of Prime Minister Narendra Modi is making a renewed push to reduce reliance on key imports even as previous attempts to boost domestic manufacturing ​have failed to make a dent.The new scheme has been designed ⁠after assessing ‌the incentives required to make local production viable against the country's existing import ​dependence, the sources ​said.The incentive plan could benefit state-run BEML, which has plans to domestically ⁠manufacture tunnel boring machines, along with other equipment makers including Larsen ​and Toubro and Johnson Lifts.The plan would also include targets for local ​value addition for machines that are presently fully imported.A final decision on the incentive plan is expected soon, both the sources said. India's federal heavy industries ministry and finance ministry did not respond to a request for comment.India's construction and infrastructure equipment market, valued at 1 trillion rupees ($10.5 billion), is set to expand as the country accelerates spending on roads, metros, airports and other infrastructure.CHINESE ‌DEPENDENCEFollowing the 2020 deadly border clashes between Indian and Chinese troops, New Delhi had imposed restrictions on investments and public procurement from Beijing.In 2024, China gradually imposed ​restrictions on exports ​of tunnel boring machines ⁠by delaying customs clearances for shipments to India.Imports of tunneling machinery from China dropped to $3 million in 2023-24 from $18 million a year earlier. They fell further to $500,000 in 2024-25, and were $800,000 in 2025-26.The issue ​of easing restrictions on tunnel boring machines also figured in bilateral talks between the two countries last year.In 2026, India eased restrictions on investments made by Chinese companies and gradually allowed Chinese firms to participate in government contracts.The incentive plan aims to address the gap where India does not have sufficient manufacturing capability and has high import dependency, the first source said.