Is the Indian Mining and Construction Industry Growing in Q1?
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Synopsis
The Indian mining and construction industry shows a promising growth rate of 2 to 5 percent in Q1 FY26, driven by significant export gains. Despite challenges like monsoon disruptions and rising costs, the government's investment and upcoming projects may spur future growth. Discover the latest insights into this vital sector's performance.
Key Takeaways
- 2-5 percent growth in the Indian MCE sector for Q1 FY26
- Estimated volumes between 1.43-1.47 lakh units
- 31 percent YoY growth in exports despite domestic contraction
- Government's Rs. 11.2 lakh crore capital expenditure plan
- Challenges include monsoon disruptions and rising costs
New Delhi, July 15 (NationPress) The Indian mining and construction (MCE) sector recorded a year-on-year (YoY) volume increase of 2 to 5 percent during the initial quarter of FY26, as detailed in a report published on Tuesday.
The estimated volumes are projected to be between 1.43-1.47 lakh units, reflecting a slight decline of 1 percent YoY in Q1 FY2026, according to preliminary data from the Indian Construction Equipment Manufacturers Association (ICEMA), as stated in an ICRA report.
Despite a 4 percent YoY contraction in domestic volumes, robust 31 percent YoY growth in exports bolstered overall sales during this timeframe, the report highlighted.
ICRA predicts an uptick in new award activities in the second quarter of FY2026, particularly from governmental initiatives.
Looking ahead, sustained demand for industrial and warehousing construction is likely to reinforce the growth of MCE volumes. Nonetheless, the rising costs associated with the Construction Equipment Vehicles (CEV)-V norms might dampen demand and impact OEM margins.
“The early arrival of monsoons and unexpected rains in various regions disrupted construction and mining operations in Q1 FY2026, a situation mirrored in the stagnant production figures from Coal India Limited during this period,” noted Ritu Goswami, Head of Corporate Ratings at ICRA.
The sluggish pace of new awards and a slowdown in road construction and the Jal Jeevan Mission (JJM) projects have further affected the demand for earthmoving machinery, a significant segment of the Indian MCE sector, Goswami added.
In Q1 FY2026, the 31 percent growth in exports was primarily driven by backhoe loaders, excavators, and skid steer loaders, which together represented 76 percent of total exported volumes and experienced a 34 percent YoY growth, according to the report.
The United States stands as one of the top two MCE markets globally and ranks among the top five export destinations for Indian-manufactured MCEs and associated components.
The government has earmarked Rs. 11.2 lakh crore for capital expenditure in FY2025-26, with key projects such as the JJM, PM Gram Sadak Yojna (PMGSY), and PM Awas Yojna-Gramin (PMAYG) receiving heightened attention, expected to accelerate activities in the forthcoming quarters, the report stated.
Point of View
I observe with optimism the intricate dynamics of the Indian mining and construction sector. The reported growth, coupled with government initiatives, suggests a potential rebound in activity. However, it is critical to address the challenges posed by environmental factors and rising costs to ensure sustainable development.
NationPress
16/07/2025
Frequently Asked Questions
What is the growth percentage of the Indian MCE industry in Q1 FY26?
The Indian mining and construction industry experienced a growth of 2 to 5 percent in Q1 FY26.
What factors contributed to the growth in exports?
The growth in exports was primarily driven by backhoe loaders, excavators, and skid steer loaders, which saw a 34 percent YoY increase.
What challenges did the sector face in Q1 FY26?
Challenges included disruptions caused by early monsoons, unseasonal rains, and increased costs due to new CEV-V norms.
How much has the government allocated for capital expenditure?
The government has allocated Rs. 11.2 lakh crore for capital expenditure in FY2025-26.
What is the expected trend for the second quarter of FY26?
An increase in new award activity, particularly from government projects, is anticipated in the second quarter of FY26.
