India is preparing a major push to strengthen local manufacturing of high-value construction and infrastructure equipment, with the government set to approve a $1.2-billion incentive programme aimed at reducing dependence on imported machinery, particularly from China.
The scheme, expected to be finalised soon, could attract $1.8 billion in fresh investment over 7 years. It will support domestic manufacturers of equipment such as tunnel boring machines, firefighting systems and elevators used in high-rise buildings.
India remains heavily dependent on imported tunnel boring machines, which are widely used for metro rail and highway projects. China has been one of the key suppliers of such machinery. The new plan has been designed after assessing the incentives needed to make domestic production commercially viable.
State-owned BEML, which plans to manufacture tunnel boring machines in India, could benefit from the scheme along with equipment makers such as Larsen and Toubro and Johnson Lifts. The programme is also expected to include local value-addition targets for machinery that is currently fully imported.
India’s construction and infrastructure equipment market is valued at Rs. 1 trillion ($10.5 billion) and is expected to expand as spending on roads, metros, airports and other infrastructure increases.
India seeks to cut dependence on Chinese machinery
The push comes amid long-standing concerns over India’s reliance on Chinese equipment. Following the 2020 border clashes between Indian and Chinese troops, New Delhi introduced restrictions on investments and public procurement from China.
In 2024, China gradually restricted exports of tunnel boring machines by delaying customs clearances for shipments to India. Imports of tunnelling machinery from China fell to $3 million in 2023-24 from $18 million a year earlier. They declined further to $500,000 in 2024-25 before rising to $800,000 in 2025-26.
The issue of easing restrictions on tunnel boring machine trade was also discussed during bilateral talks between the 2 countries last year.
In 2026, India eased some restrictions on investments by Chinese companies and gradually allowed Chinese firms to participate in government contracts.
The proposed incentive scheme is intended to address India’s limited domestic manufacturing capacity and high import dependence. A final decision is expected soon.
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