India’s $1.2 Billion Investment in Domestic Tunnel Boring Machines and Construction Equipment
India is poised to approve a $1.2 billion incentive scheme aimed at boosting the domestic manufacturing of high-value construction and infrastructure equipment. This initiative seeks to reduce the country’s reliance on China for critical machinery, according to two government sources cited by Reuters. The scheme, expected to be finalized soon, aims to attract approximately $1.8 billion in new investments over the next seven years by providing incentives to local manufacturers.
Focus on Domestic Manufacturing
India’s current dependence on imported tunnel boring machines, particularly from China, has raised concerns. The new scheme is designed to address this issue by assessing the necessary incentives to make domestic production viable. It will include local value-addition targets for machines that are currently fully imported. Companies like state-run BEML, which plans to manufacture tunnel boring machines domestically, as well as equipment makers such as Larsen & Toubro and Johnson Lifts, are likely to benefit from this initiative.
The Union Cabinet is expected to review the scheme soon. Inter-ministerial discussions have reportedly concluded, with approvals anticipated by the end of August. This scheme was first announced in the 2026-27 Union Budget, aiming to strengthen domestic production of advanced construction equipment, which includes lifts, fire-fighting equipment, and tunnel-boring machines.
Concerns Over Chinese Machinery
India’s reliance on Chinese machinery, especially in the tunnel boring segment, has become a significant concern. Following border clashes in 2020, New Delhi imposed restrictions on investments and public procurement from China. In 2024, China also delayed customs clearances for shipments of tunnel boring machines to India. Consequently, imports of tunneling machinery from China plummeted from $18 million in 2022-23 to just $3 million in 2023-24. Although imports slightly increased to $800,000 in 2025-26, the decline reflects ongoing tensions.
The issue of easing restrictions on tunnel boring machines was part of bilateral discussions between India and China last year. In 2026, India relaxed some restrictions on Chinese investments and gradually allowed Chinese firms to participate in government contracts.
Infrastructure Demand Fuels Growth
India’s construction and infrastructure equipment market is valued at around 1 trillion rupees ($10.5 billion) and is expected to grow as the government increases spending on roads, metros, airports, and other infrastructure projects. The expanding infrastructure pipeline is driving demand for specialized machinery, including tunnel boring machines and large cranes. A report by Boston Consulting Group and CII noted that India’s share of the global mining and construction equipment industry has doubled from about 2.5% to 4% and is projected to reach approximately 6.5% in the next five years. Roads, railways, ports, and airports are key drivers of demand for various categories of specialized construction equipment.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
