RISING AHEAD in 2025!

The Indian construction equipment industry has emerged as a cornerstone of the nation’s infrastructure development agenda, enabling rapid progress in urbanization, connectivity, and economic growth. At the heart of this industry lies its robust component manufacturing sector, which forms the backbone of innovation, reliability, and efficiency in construction equipment. As 2025 approaches, component manufacturers find themselves at a critical juncture where market trends, technological advancements, and policy frameworks converge to define a dynamic future. This article delves into the outlook for Indian construction equipment component manufacturers in 2025, exploring market opportunities, challenges, and transformative trends.

India’s construction equipment market is projected to grow at a compound annual growth rate (CAGR) of 8-10% through 2025, driven by robust demand from sectors such as road construction, mining, urban infrastructure, and rural development. Component manufacturers are poised to benefit significantly from this growth as Original Equipment Manufacturers (OEMs) increasingly rely on localized supply chains to mitigate costs and reduce lead times.

The government’s push for large-scale infrastructure projects, under initiatives such as the National Infrastructure Pipeline (NIP) and Gati Shakti plan, is expected to drive higher demand for construction equipment. This, in turn, will spur the demand for critical components such as hydraulic systems, engines, undercarriages, and electrical assemblies. Export markets also present opportunities for Indian manufacturers, particularly in regions like Southeast Asia, Africa, and the Middle East, where cost-effective and durable components are in high demand.

Trends Shaping the Future

Component manufacturers are increasingly integrating advanced technologies to meet the evolving demands of OEMs and end-users. Key areas of innovation include:

Electrification: With sustainability becoming a global priority, electric and hybrid construction equipment is gaining traction. This shift necessitates the development of specialized components such as high-capacity batteries, electric drivetrains, and power management systems.

Automation and IoT: Smart components that facilitate automation and connectivity, such as sensors, telematics devices, and control systems, are witnessing growing adoption. These technologies enable predictive maintenance, enhance operational efficiency, and reduce downtime.

3D Printing: Additive manufacturing is revolutionizing component production by reducing prototyping costs, enabling customization, and accelerating time-to-market.

Localization and Supply Chain Resilience

The pandemic underscored the vulnerabilities of global supply chains, prompting a shift towards localized manufacturing. Indian component manufacturers are investing in domestic capabilities to meet the growing preference for locally sourced components. This trend is further supported by the government’s ‘Make in India’ and Production Linked Incentive (PLI) schemes, which incentivize domestic production and exports.

Sustainability and Green Manufacturing

Sustainability is no longer a choice but a necessity. Component manufacturers are adopting green manufacturing practices, such as energy-efficient production processes, recycling initiatives, and the use of eco-friendly materials. Regulatory norms, including stricter emission standards (BSVI and beyond), are pushing the industry towards cleaner and more efficient components.

Customization and Modular Designs

OEMs are demanding components tailored to specific applications and environments. Modular designs that allow easy integration and scalability are gaining popularity, enabling manufacturers to cater to diverse customer needs while optimizing inventory management.

Challenges on the Horizon

While the outlook for 2025 is promising, component manufacturers must navigate several challenges to fully realize their potential:

Raw Material Volatility: Fluctuating prices and supply disruptions of critical raw materials, such as steel, aluminum, and rare earth elements, can impact production costs and profitability.

Technology Gaps: Bridging the gap between traditional manufacturing processes and advanced technologies remains a challenge, particularly for small and medium-sized enterprises (SMEs).

Skilled Workforce: The industry’s rapid evolution necessitates a skilled workforce adept at handling advanced machinery and technologies. Addressing this skills gap will require focused training and development initiatives.

Global Competition: Indian manufacturers face stiff competition from established global players, particularly in the export market. Maintaining competitive pricing without compromising quality is crucial.

Strategies for Growth and Resilience

To thrive in the evolving landscape, Indian component manufacturers must adopt a multi-pronged strategy that leverages their strengths and addresses critical challenges:

Investing in R&D: Innovation is key to staying competitive. Manufacturers must prioritize research and development to create cutting-edge components that meet emerging industry standards and customer expectations.

Collaborations and Partnerships: Strategic collaborations with OEMs, technology providers, and academic institutions can facilitate knowledge sharing, resource optimization, and accelerated innovation.

Digital Transformation: Adopting Industry 4.0 practices, such as smart factories, data analytics, and artificial intelligence, can enhance operational efficiency, reduce waste, and improve decision-making.

Export Focus: Expanding into international markets requires a strategic approach, including understanding local regulations, building distribution networks, and participating in global trade fairs.

Workforce Development: Upskilling and reskilling the workforce through industry-academia collaboration and apprenticeship programs can bridge the skills gap and prepare employees for future challenges.

Policy Support and Regulatory Landscape

The Indian government’s proactive measures are creating a conducive environment for component manufacturers to flourish. Key initiatives include:

PLI Scheme: The scheme incentivizes production and exports of key components, fostering global competitiveness.

Infrastructure Development: Increased spending on infrastructure is driving demand for construction equipment and components.

Ease of Doing Business: Simplified regulatory processes and tax benefits are encouraging investments in the manufacturing sector.

Emerging Opportunities

Aftermarket Services: The growing base of construction equipment in India is driving demand for aftermarket services, including maintenance, repairs, and replacement parts. Component manufacturers can tap into this lucrative segment by offering high-quality and cost-effective solutions.

Sustainable Components: As OEMs emphasize sustainability, manufacturers that develop eco-friendly components stand to gain a competitive edge. Examples include biodegradable hydraulic fluids, lightweight materials, and energy-efficient systems.

Digital Solutions: Components that enable digital integration, such as IoT-enabled sensors and telematics modules, are gaining traction. These solutions enhance equipment performance and provide actionable insights for end-users.

Export Potential: Indian manufacturers have a unique opportunity to cater to emerging markets where cost-effective solutions are in demand. Developing a strong export strategy can unlock significant growth potential.

As 2025 unfolds, the Indian construction equipment component manufacturing sector is set to play a pivotal role in shaping the industry’s future. By embracing innovation, sustainability, and collaboration, manufacturers can overcome challenges and seize emerging opportunities. The road ahead is undoubtedly challenging, but with a proactive approach and strategic vision, Indian component manufacturers can position themselves as global leaders in the construction equipment ecosystem. The year 2025 promises not just growth but a transformative era for the industry, paving the way for a resilient and sustainable future.

Industry’s voice…

Anuj Kathuria, President – India, JK Tyre, said, “The outlook for 2025 is optimistic, driven by growth in infrastructure and mining projects. Mechanization is becoming the norm, with labor costs rising and efficiency demands increasing. As long as infrastructure projects are announced and mining activity continues, the demand for OTR solutions will remain robust.

Additionally, we see significant growth opportunities in underground mining, which is becoming more efficient and cost-effective due to technological advancements. This trend will likely drive demand for specialized solutions tailored to underground applications, minimizing surface disruption and maximizing resource extraction.”

Alok Kumar, Associate Director & Head - Sales & Service, Rehlko (Kohler Energy), said, “We are optimistic about 2025. India’s leadership and ambitious goals, such as achieving a $5 trillion economy, position the country for sustained growth. The construction and off-highway equipment industries are vital contributors to this vision. We anticipate strong demand driven by projects like the construction of new airports, increased road-building activity, and urban infrastructure developments. For example, the daily road construction target has increased from 27 km to 37 km, with ambitions to reach 100 km per day. This growth reflects the government’s commitment to infrastructure and industrialization, which will
drive demand for our products for at least the next decade.”

Jameson Mendonca, Powergen Business Leader, Cummins India, said, “We are cautiously optimistic about 2025. While geopolitical uncertainties and external factors can influence the market, India’s growth story remains intact. With our strong product lineup and readiness, we expect the year to be stable and positive. For 2025, our growth plans are centered on leveraging the advanced features of the new CPCB 4 Plus series to solidify our market position. These gensets are designed to meet stringent emission norms while offering better fuel economy, which translates into reduced operational costs for customers. The integration of telematics and IoT capabilities further ensures predictive maintenance, enhancing reliability and uptime. We aim to expand our market penetration across both domestic and international markets. By continuing to innovate and adapt to emerging customer needs, we plan to introduce new products that align with future regulations and technological advancements. Scaling up production capacity to meet growing demand while maintaining quality will also be a key focus area.”