Mining & construction equipment sector to see acceleration of new award activity in H2 FY26: ICRA

New Delhi, Jul 15 (PTI) The mining and construction equipment sector which reported a marginal volume decline in the first quarter of this fiscal year, is expected to witness an acceleration of new award activity in the second half of this financial year, especially led the government initiatives, according to rating agency ICRA.

Early arrival of monsoons and unseasonal rains in some regions disrupted the construction and mining activities in the first quarter, which is also reflected in the flattish production data reported by Coal India Ltd during this period compared to a year ago, ICRA said on Tuesday.

Following the decline witnessed in the first quarter, the rating agency said that it expects an acceleration of new award activity in H2 FY2026, especially by the government.

"The tepid new award activity and slowdown in road construction and Jal Jeevan Mission (JJM) projects has also hampered demand for the earthmover segment, which constitutes a bulk of the Indian MCE (mining and construction equipment) sector demand.

"Given the observed weakness in domestic demand during Q1 FY2026 -- which is expected to persist into Q2 as monsoon conditions impact the construction sector -- industry recovery hinges on the improved traction in H2 FY2026," Ritu Goswami, Sector Head, Corporate Ratings, ICRA said.

Further, several industries are set to witness continued industrial and warehousing construction demand because of domestic market focus, thereby supporting volumes, it said in a statement.

ICRA projects the industry to display a muted year-on-year (YoY) volume growth of 2–5 per cent in FY2026, corresponding to volumes of 1.43-1.47 lakh units.

The Indian MCE industry reported a marginal volume decline in Q1, as per the initial data released by the Indian Construction Equipment Manufacturers Association (ICEMA).

While the domestic volumes contracted by four per cent YoY, a strong 31 per cent Y-o-Y growth in exports supported the overall sales during this period. PTI SID DRR