India begins to China-proof its infra push after the TBM shock

The delay in the delivery of German tunnel boring machines (TBMs) from China last year was a reminder that India's massive infrastructure ambitions remain tied to supply chains it does not fully control. The machines were needed for critical projects, including the Mumbai-Ahmedabad bullet train corridor, yet export clearances from China became a bottleneck.

The episode exposed a vulnerability that goes far beyond tunnels. As India ramps up spending on metros, railways, highways, ports, airports and mining, it is facing an urgent question: who will build the machines that build India? The answer is becoming increasingly important as the government now prepares an incentive scheme for construction and infrastructure equipment manufacturing, ET reported today. At stake is not just industrial growth, but the resilience of India's infrastructure push itself.

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The heart of India's growth story

Mining and construction equipment rarely attracts public attention, yet it sits at the centre of almost every major investment project. Roads require earthmoving equipment. Metro systems and rail corridors need tunnel boring machines (TBMs), piling rigs and specialised cranes. Ports and airports depend on advanced handling systems. Mines require increasingly sophisticated excavation and material movement equipment.

According to the BCG-CII report, India's mining and construction equipment industry is already one of the fastest-growing major markets in the world. Domestic demand exceeded $17 billion in 2025 and is growing at 10-12% annually. India's share of the global industry has doubled from around 2.5% to 4% and is expected to reach about 6.5% within the next five years.

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The scale of the opportunity mirrors the scale of India's infrastructure ambitions. Capital expenditure across mining and construction equipment-linked sectors is projected to rise from about ₹5.5 lakh crore in 2025 to ₹9-10 lakh crore by 2030, driven by investments in highways, freight corridors, metro rail, ports, airports, mining and clean energy.

Why the China TBM episode matters

The tunnel boring machine delays due to Chinese export controls last year drew attention because they affected high-profile projects. But the larger significance lies in what they revealed about India's dependence on overseas manufacturing for specialised equipment. The machines were manufactured by German company Herrenknecht but produced at facilities in China. When export clearances were delayed, Indian projects worth billions of dollars faced uncertainty.

India has built considerable capabilities in conventional construction machinery. Global firms such as Caterpillar, Komatsu, JCB and others have manufacturing operations in the country. Domestic players have also expanded significantly. Yet many advanced systems and high-value components continue to be sourced from abroad. The TBM case showed how geopolitical tensions, export restrictions or supply chain disruptions can directly affect project timelines.

As India expands metro networks, develops high-speed rail and undertakes increasingly complex infrastructure projects, demand for technologically advanced equipment will rise sharply. The challenge is no longer simply acquiring machines. It is ensuring reliable access to them. The proposed incentive scheme reflects a growing recognition that industrial capability and infrastructure capability are closely linked.

Mining emerging as the next big driver

Infrastructure is only one side of the story. Mining is also becoming an equally important source of demand. India's push to secure critical minerals for batteries, electric vehicles, renewable energy systems and advanced manufacturing is creating fresh demand for mechanised mining. Alongside conventional minerals such as coal and iron ore, the country is seeking to expand exploration and production of critical minerals that are increasingly important for the energy transition.

The BCG report notes that India's mining and construction output already stands at around $430 billion, close to 11% of GDP, and supports the livelihoods of more than 70 million people across the value chain.

As mining activity expands, demand will rise for advanced excavators, dump trucks, drilling systems, crushing equipment and digital fleet management technologies. This makes the mining and construction equipment sector strategically important not only for infrastructure but also for India's resource security ambitions.

The localisation gap

Despite significant progress, the industry's manufacturing ecosystem remains incomplete. According to the BCG report, overall localisation in construction equipment is around 50%. The shortfall is concentrated in high-value components such as hydraulics, electronic controls and undercarriage systems, which continue to be largely imported. While backhoe loaders have achieved localisation levels of 85-90%, excavators are localised at only 55-60%.

This is where the proposed incentive scheme might have its biggest impact. The significance of the scheme lies not in supporting products that India already manufactures competitively, but in encouraging production of technologically intensive equipment and components. Tunnel boring machines (TBMs), advanced mining systems, specialised cranes and critical sub-systems are precisely the segments where India remains dependent on external supply chains.

If designed well, the scheme can encourage global manufacturers to expand production in India, deepen supplier networks and accelerate localisation of critical components. It can also help domestic firms move beyond assembly into higher-value engineering and manufacturing.

Can India become an export hub?

The export opportunity may ultimately be larger than the domestic opportunity. The global mining and construction equipment industry is worth around $420-440 billion, while annual global imports are estimated at roughly $150 billion. India currently supplies less than 4% of this import demand, leaving enormous room for expansion. But India has already crossed an important threshold. Exports of mining and construction equipment have nearly tripled over the past decade to around $4.9 billion in 2025, and the country now exports more equipment than it imports.

The most immediate opportunity lies in developing markets across Southeast Asia, Africa, the Gulf and South America. These regions are investing heavily in infrastructure and mining but remain highly dependent on imported equipment. According to the BCG report, China currently supplies nearly half of the mining and construction equipment imported by many of these markets. As buyers seek to diversify sourcing, India has an opportunity to position itself as an alternative manufacturing base.

The report argues that India already has a credible offering in these regions but will need stronger distribution networks, better after-sales support and export-focused products to expand its presence. By 2047, India could aspire to capture at least 20% of the global export market, representing an annual opportunity of roughly $75 billion. For a country seeking to expand manufacturing exports, few sectors offer such a combination of domestic demand and global opportunity.

More than an industrial policy

The proposed incentive scheme arrives at a time when India is attempting one of the world's largest infrastructure buildouts. Metro rail networks are spreading across cities. High-speed rail projects are under construction. New highways, ports and airports are being developed at scale. Mining activity is expected to rise alongside efforts to secure critical minerals.

The BCG report estimates that the Indian mining and construction equipment industry could grow into a $180-200 billion market by 2047. Achieving that ambition will require more than rising demand. It will require deeper localisation, stronger supplier ecosystems, greater investment in research and development and the ability to compete globally. That is why the TBM episode matters. It was not simply a story about delayed machines. It highlighted the strategic importance of building domestic capability in the equipment that powers infrastructure and mining.

India's next phase of growth will depend not only on the roads, railways and mines it builds, but also on whether it can build more of the machines that build India.