India’s MCE industry is expected to post a muted 2–5% volume growth in FY2026, translating to 1.43–1.47 lakh units, according to ICRA. The sector saw a 1% YoY dip in Q1 FY2026, with domestic volumes down 4%, but exports surged 31%, led by backhoe loaders, excavators, and skid steer loaders.
Key Drivers include - Government Capex Push: Rs11.2 lakh crore allocated for FY2025–26, with renewed focus on PMGSY, JJM, and PMAY-G
Early rains and unseasonal weather impacted Q1 construction and mining activity while, CEV-V Norms & Steel Costs - Regulatory changes and safeguard duties raised equipment prices, squeezing OEM margins. US remains a top destination; diversification offsets tariff concerns
As per Ritu Goswami, Sector Head, Corporate Ratings, ICRA, “Industry recovery hinges on improved traction in H2 FY2026, as new award activity picks up and infrastructure execution accelerates.”
Despite regulatory cost pressures and seasonal slowdowns, ICRA expects OEM credit profiles to remain stable, backed by low leverage and strong liquidity. The long-term outlook remains positive, with industrial and warehousing demand supporting volumes and global markets offering growth headroom.
