Indian Mining and Construction Equipment Sales Expected to Decline in FY2025

Chennai: General elections in the first half of the year may impact demand for mining and construction equipment.

The sales volumes of the domestic mining and construction equipment industry are estimated to decline in FY2025 following two consecutive years of strong growth. Against 26 per cent growth in FY23 and 24 per cent in FY2024, ICRA expects a 12 to 15 per cent decline in sales in FY25. This could translate into volumes of 1.14-1.18 lakh units in FY25.

The reversal in this growth trend will be driven by a slowdown in the new project award activity in Q4 FY2024 and Q1 FY2025, as the Model Code of Conduct will remain in force during the Parliamentary Elections in April-May 2024.

Further, the project awarding activity has seen a disruption in the past two quarters. “Pre-election push on project execution by the Government created a strong demand momentum for the MCE industry in the last two years. However, with a likely disruption in project award activity for two consecutive quarters for Q4 FY2024 and Q1 FY2025 amidst the Parliamentary Elections and monsoon-related impact on construction activities in Q2, H1 FY2025 is expected to see a moderation in sales,” Ritu Goswami, Sector Head, Corporate Ratings, ICRA.

However, the volumes are expected to ramp up in H2, given the pick-up in new project awards starting Q3 and partly supported by pre-buying due to the CEV-V emission norm transition in January 2025.

While the near-term domestic MCE demand environment remains challenging, the industry’s long-term prospects remain intact, given the continued government focus on infrastructure development.