Backdrop & Context: Infrastructure Ambitions in Jeopardy
India’s infrastructure ambitions have been on overdrive, with the government investing trillions in national highways, high-speed rail corridors, metro projects, and smart cities. At the core of these efforts lies the construction equipment (CE) industry, responsible for producing the machines that execute the government’s ambitions on the ground. With an annual growth rate of 8%–10%, the CE sector contributes significantly to the Make in India mission and job creation across states. However, the proposed safeguard duty on steel imports threatens to stall this progress. Steel is not just a raw material, it forms the skeletal framework of these machines. Imposing an import duty will inevitably lead to higher input costs, potentially paralyzing manufacturing and delaying public projects.
Who’s Involved?: Industry Titans, Policymakers & Trade Bodies
The Indian Construction Equipment Manufacturers Association, representing over 70% of the organized CE industry, issued a strong statement opposing the imposition of a 12% safeguard duty on imported steel. According to ICEMA President Dimitrov Krishnan, "This policy, though well-intentioned to support domestic steelmakers, risks undermining the backbone of India's infrastructure drive."
The Directorate General of Trade Remedies, functioning under the Ministry of Commerce & Industry, is currently reviewing domestic steelmakers’ claims that a surge in imports is threatening local producers. Simultaneously, global steel giants like POSCO (South Korea), Nippon Steel (Japan), and ArcelorMittal have been key suppliers of high-grade inputs to Indian CE firms. While Indian steelmakers like JSW and Tata Steel support the safeguard duty, downstream sectors like ICEMA are urging the government to differentiate between commodity-grade steel and specialized grades that aren’t manufactured locally.
Steel: The Unseen Pillar of Construction Equipment
Most construction machines, from bulldozers to pavers, are built using specialized steel components such as high-tensile structural plates, wear-resistant pipes, and seamless tubes. A 20-ton excavator, for instance, uses nearly 12 metric tons of steel. ICEMA’s technical sub-committee reported that over 60% of this steel is imported due to lack of suitable domestic substitutes. “Even with Make in India, we still don’t have the capability to produce niche grades like S690QL or X120Mn12 in required volumes,” said an executive at L&T Construction. Moreover, steel accounts for 35%–40% of the overall manufacturing cost of equipment. Thus, any price hike directly impacts the end product.
Price Shock & Market Disruption from DGTR Probe
The steel market has already reacted negatively to the proposed duty. Since the DGTR initiated its investigation, domestic steel prices have risen by ₹10,000 per metric ton (approx. $120), according to ICEMA. This volatility is affecting contract pricing, inventory planning, and supplier relations. “We're seeing steel vendors revise quotes weekly. That’s unprecedented,” said Amit Agarwal, procurement head at a leading CE firm in Pune. Smaller manufacturers, especially Tier 2 and Tier 3 suppliers, are the worst hit. They rely on imported material via traders and don’t have the scale to negotiate fixed-term pricing. The industry fears this unpredictability may even lead to project cancellations or tender revisions in public infrastructure schemes.
Emission Norms Fuel Financial Burnout
The construction industry had just begun absorbing the cost shock from India’s adoption of CEV Stage V emission norms on January 1, 2025. These regulations, modeled on EU Stage V standards, mandate costly changes in engine design, after-treatment systems, and electronic control modules. According to a report by Frost & Sullivan, the average cost of upgrading a mid-sized backhoe loader to Stage V compliance is between ₹3 lakh to ₹5 lakh ($3,600–$6,000). ICEMA believes that layering a 12% steel duty on top of these existing obligations will stretch manufacturers beyond capacity. “We’re not against compliance, but the timeline and cost layering are not sustainable,” said ICEMA Director-General Amit Gossain.
India’s Export Dreams in Peril
As the world looks to de-risk from China-centric supply chains, Indian CE manufacturers have gained visibility in Southeast Asia, Africa, and the Middle East. Exports of Indian construction machinery rose by 18% in 2024, reaching $1.7 billion. But rising input costs threaten to reverse this trend. “Our price advantage is razor-thin,” said Krishnan. “Even a 4% increase in manufacturing cost can push buyers to look elsewhere.”
Countries like Vietnam and Indonesia are offering tax waivers and steel subsidies to attract international OEMs. If India fails to remain cost-competitive, global buyers may turn away. The Confederation of Indian Industry has also echoed this concern, requesting the Centre to safeguard India’s hard-won export gains.
ICEMA’s Policy Recommendations & Stakeholder Demands
ICEMA is urging the Centre to adopt a calibrated approach. Its five-point recommendation includes:
1. Exempting specialized steel grades not produced locally from the duty,
2. Establishing a steel input classification system to differentiate critical grades,
3. Setting up a joint task force with DGTR, Ministry of Steel, and industry players,
4. Implementing a price monitoring dashboard to prevent speculation-driven surges,
5. Exploring Production Linked Incentives for domestic specialty steelmakers.
“There is a path where domestic steelmakers and CE manufacturers can both thrive,” said ICEMA in its concluding note. It has requested the Ministry of Commerce to delay any notification until broader stakeholder consultations are completed.
Key Takeaways:
• ICEMA has warned the proposed 12% steel import duty may paralyze the $9.5 billion CE sector.
• Specialized steel for construction machinery is not produced domestically in adequate quality or volume.
• Domestic prices have risen by ₹10,000 per metric ton ($120) since DGTR launched its safeguard duty probe.
• Compliance with CEV Stage V emission norms has already increased manufacturing costs by up to $6,000 per machine.
• India risks losing its export competitiveness amid rising global competition and de-risking supply chains.
• ICEMA has proposed a five-point framework to balance local steel production with industrial growth.
