As India prepares for another year of aggressive public infrastructure spending, Finance Minister Nirmala Sitharaman has turned the spotlight on a critical but often overlooked link in the development chain: construction and infrastructure equipment.
In the Union Budget 2026–27, Sitharaman announced a Rs. 200 crore outlay for a new Scheme for Enhancement of Construction and Infrastructure Equipment (CIE), aimed at expanding domestic manufacturing of high-value, technologically advanced machinery and reducing dependence on imports. The move comes against the backdrop of public capital expenditure pegged at a record Rs. 12.2 lakh crore for 2026–27, signalling the government’s intent to strengthen not just project pipelines, but also execution capability.
“A Scheme for Enhancement of Construction and Infrastructure Equipment (CIE) will be introduced to strengthen domestic manufacturing of high-value and technologically-advanced CIE,” Sitharaman said in her Budget speech. “This can range from lifts in a multi-story apartment, fire-fighting equipment, large and small, to tunnel-boring equipment for building metros and high-altitude roads.”
The scheme, to be rolled out in the coming financial year, focuses on equipment used across residential construction, urban safety systems, metro rail projects, and road infrastructure in challenging terrains. Industry participants see it as a structural intervention that could quietly reshape how India builds its cities.
Plugging a critical gap in India’s infrastructure push
While India has made significant strides in roads, railways, metros and urban infrastructure over the past decade, a large part of the equipment powering this growth continues to be imported. High-value machinery such as tunnel-boring machines for metro projects, advanced elevators, and specialised fire-safety systems are still largely sourced from global manufacturers.
The CIE scheme seeks to change that equation by incentivising domestic production of such equipment, lowering costs, shortening procurement timelines, and improving supply reliability. According to officials familiar with the proposal, the policy is designed to build scale and capability in segments where India currently lacks depth.
Industry officials say the scheme addresses a long-standing gap in domestic capacity for advanced construction machinery. Tunnel-boring machines, a cornerstone of metro rail expansion, remain one of the most import-dependent categories, making projects vulnerable to global supply disruptions and currency volatility.
By strengthening domestic manufacturing, the government hopes to bring greater predictability to project execution at a time when infrastructure delivery schedules are under increasing scrutiny.
Hi-Tech Tool Rooms to anchor domestic capability
A key pillar of the CIE framework is the proposal to set up Hi-Tech Tool Rooms through Central Public Sector Enterprises at two locations. These centres will function as automated service bureaus, enabling precision components to be designed, tested and manufactured domestically at scale.
The model mirrors high-precision manufacturing systems used in the automobile sector, where just-in-time production and tight tolerances are essential. Officials say this approach will allow Indian manufacturers to access advanced tooling and testing infrastructure without prohibitive upfront costs, making them more competitive against overseas suppliers.
By lowering dependence on imported precision components, the government expects domestic equipment makers to scale faster and price more competitively, particularly in segments tied to metro rail, highways and high-rise construction.
Infrastructure spending meets execution efficiency
The announcement comes as public capital expenditure for 2026–27 has been set at Rs. 12.2 lakh crore, reinforcing infrastructure as the backbone of economic growth strategy. While headline numbers on capex often dominate Budget discussions, developers argue that execution efficiency is just as critical as funding.
Uddhav Poddar, CMD of Bhumika Group, says the equipment push could have a direct impact on project delivery. “The proposed scheme to enhance construction and infrastructure equipment can improve execution efficiency, reduce project timelines and bring greater predictability to delivery,” he said.
Poddar added that better connectivity and improved construction capability together could unlock new residential and commercial micro-markets. “As economic reforms also work towards easing financing conditions, we can expect increased developer confidence and institutional interest, translating into more organised, well-planned real estate growth across India’s next-generation cities.”
Boost for metros and emerging cities alike
Real estate developers see the CIE scheme as particularly relevant for Tier-2 and Tier-3 cities, where infrastructure development is accelerating but execution delays often dampen investor confidence.
B.K. Malagi, Vice Chairman at Experion Developers, said the Budget sends “a strong signal of continuity and long-term commitment to infrastructure-led growth.” According to him, sustained capex combined with improved construction capability enhances the viability of large-scale real estate developments beyond metros.
“Better infrastructure reduces risk, improves asset longevity, and makes emerging markets more attractive to institutional investors,” Malagi said. “As connectivity improves, we can expect stronger demand for residential projects, office parks, logistics hubs and mixed-use developments along new growth corridors.”
Bhupindra Singh, COO of RISE Infraventures, echoed this view, noting that faster project execution is especially critical in emerging markets. “The proposed scheme to enhance construction and infrastructure equipment will further support faster project execution, which is critical where delivery timelines shape buyer trust,” he said.
With capex raised to Rs. 12.2 lakh crore, Singh expects infrastructure-led urbanisation to gather pace, enabling smaller cities to evolve into self-sustaining urban centres rather than remaining satellite extensions of metros.
Buyer confidence and construction standards
Beyond speed and scale, developers argue that the CIE scheme could influence buyer confidence by raising construction standards and reducing quality inconsistencies.
Dr Gautam Kanodia, Founder of KREEVA and Kanodia Group, said the focus on upgrading construction equipment is timely. “Execution efficiency and timely delivery are now key determinants of buyer confidence,” he said. Over time, he added, improved financing conditions and stronger infrastructure pipelines could encourage developers to pursue long-term, planned developments rather than fragmented growth.
Chintan Sheth, Chairman and Managing Director of Sheth Realty, said the push for domestic manufacturing of advanced infrastructure equipment, from elevators to safety systems, would raise construction benchmarks. “It will improve reliability, bring down costs and align Indian real estate with global benchmarks,” he said.
Sheth also pointed to complementary measures such as the proposed Infrastructure Risk Guarantee Fund, which he believes could enhance confidence across the development cycle and enable timely execution of high-quality projects.
Real estate sector sees multiplier effect
Industry bodies see the CIE scheme as part of a broader ecosystem that supports real estate growth through infrastructure development. Prashant Khandelwal, Joint Secretary of CREDAI MCHI and CEO of Agami Realty, said Budget 2026–27 signals optimism for the sector through strategic interventions.
“The proposed Infrastructure Risk Guarantee Fund will improve access to capital and speed up the completion of large infrastructure projects, positively impacting real estate growth by improving connectivity,” he said. He added that strengthening domestic manufacturing of high-value construction equipment could lead to financial and efficiency gains that developers can pass on to customers.
However, Khandelwal urged policymakers not to lose sight of affordable housing. “Favourable policy measures can encourage developers to turn their attention to this segment and help ensure inclusive and sustainable urban growth,” he said.
A quieter reform with long-term impact
Unlike headline-grabbing tax announcements, the Rs. 200 crore CIE scheme is a relatively modest allocation in fiscal terms. Yet its impact could be outsized if it succeeds in building domestic capability in advanced construction equipment.
By reducing import dependence, improving execution efficiency and aligning manufacturing with India’s expanding infrastructure ambitions, the scheme addresses a foundational layer of urban development. As India pushes deeper into metros, high-speed rail, and high-altitude road networks, the ability to build with home-grown technology may prove as important as the money spent on projects themselves.
In that sense, the CIE scheme reflects a maturing infrastructure strategy, one that recognises that how India builds may matter just as much as how much it builds.
