Leveraging global trends and policy imperatives to drive electrification of India’s construction machinery industry
India holds an excellent position as the world’s third-largest construction equipment (CE) market, closely following China and the United States. Notably, some forecasts predict that India will overtake the US to become the second largest market by 2027. This honor covers a wide range of CE categories, from pavers, compactors and pneumatic rollers to civil engineering equipment such as cranes, forklifts, mine dump trucks, loaders and backhoe loaders.
Traditionally, CE machinery has been synonymous with diesel consumption, consuming a staggering 50,000 liters per day in a typical mining operation. The sheer volume of emissions generated highlights the urgency of transitioning to cleaner energy sources. Despite advances in electrification in the automotive sector, India’s CE landscape remains primarily dependent on diesel power. However, a paradigm shift is underway, and stakeholders are realizing the various benefits of electrification, including increased operational efficiency estimated at 40-60% and significant reductions in operating costs compared to internal combustion engine equipment. I’m becoming more and more aware of it.
Internationally, both the European Union (EU) and China have emerged as pioneers in promoting CE electrification, enacting a comprehensive set of incentives and policy reforms. Remarkably, Norway pioneered the provision of subsidies, effectively reducing the price difference between electric and engine-driven machines by as much as 40%. At the same time, the Netherlands has allocated a large budget of 270 million euros (Rs 2,432 million) under the Clean and Emission-Free Construction Materials Subsidy Scheme (SSEB) to procure or retrofit zero-emission construction equipment. .
Additionally, regulatory obligations are driving the introduction of zero-emission construction equipment in regions such as Oslo and China, with the former requiring public construction to be zero-emissions by 2025, followed by general construction. Japan is also required to achieve zero emissions by 2030. Shenzhen is a good example. is promoting electric forklifts through its ‘Shenzhen Blue’ sustainable action plan, with a maximum cap of RMB 800 (approx. Rs. 9,363) per kilowatt-hour and a maximum cap of RMB 40,000 (approx. Rs. 4,68,143) per forklift. We offer generous subsidies. The concrete results of such efforts are obvious, with China achieving sales of approximately 4,000 electric CE units in 2022 alone.
These global precedents serve as a sobering reminder that similar incentives are essential in India’s CE environment. With the impending deployment of FAME-III and the debate surrounding innovative vehicle form factors such as the E-tractor, the need to encourage the CE sector is becoming increasingly compelling. Moreover, the allocation of Rs 2,671 million in the interim budget for 2024-2025 underlines the government’s unwavering commitment to expediting initiatives like FAME.
In promoting the electrification of the CE industry, policymakers have a range of tools at their disposal under the FAME regime. These include incentivizing CE machinery and charging infrastructure, rationalizing GST rates on par with other electric vehicles, waiving off-road taxes and registration fees, and providing subsidies to boost R&D efforts for domestic and export markets. This includes the founding. Additionally, government agencies responsible for infrastructure bidding can play a vital role by mandating the inclusion of electromechanical equipment within projects.
Implementation of these strategic recommendations aligns seamlessly with the government’s overarching objective of strengthening the EV ecosystem, as highlighted in the Interim Budget. Through such coordinated measures, we can chart a course for new support for the entire EV value chain, including significant support for the CE industry.
author
Mr. Yuvraj Sarda
Responsible Person – EMob Solutions
Volvo CE India
