Construction equipment manufacturer Tata Hitachi will implement another price increase from October 1 as it seeks to offset rising input costs, but expects to realise a maximum annual price hike of around 2.5%, well below the 3.5-4% required to fully absorb the rise in commodity prices, Managing Director Sandeep Singh told FE.
Commodity prices have risen 5-6% this year, while Tata Hitachi has so far taken a 1.25% price hike. The company expects to grow 14-15% in the current financial year, despite challenges in export markets and higher logistics costs. Tata Hitachi exports around 700-800 machines annually out of a total production of about 9,000, with West Asia, Africa and Southeast Asia among its key markets.
While domestic demand has not been a challenge, Singh said, overseas markets have been affected by geopolitical disruptions and higher logistics costs. Freight costs on some routes have increased sharply, adding pressure to exports.
Singh said geopolitical tensions in West Asia have pushed equipment shipping costs up tenfold. “Assume if the Mumbai to Dubai vessel was costing $600, today they are costing $6,000,” he said.
The disruption has also resulted in equipment being held up in transit for many exports, Singh said.
Tata Hitachi is currently operating at around 70% capacity utilisation and does not see an immediate need to expand capacity. The company invests around Rs 200 crore annually in maintenance and expansion.
The company has around 65% localisation and is increasing it by around 2-3 percentage points annually. Singh said localisation remains challenging because construction equipment is a relatively low-volume industry, making it difficult for suppliers to achieve the scale required to manufacture components domestically.
A proposed government incentive scheme for construction equipment could help accelerate localisation and domestic manufacturing, Singh said. The scheme is expected to encourage production in India of equipment currently imported from neighbouring countries, including tunnel-boring machines and specialised equipment used in mining, roads and ports.
“So it will be a good scheme because it will open markets for some of our vendors and for us,” Singh said.
He said that the domestic demand is being supported by government spending on roads, urban development, mining, irrigation, ports and railways. Singh said a revival in private investment could provide an additional boost, as new manufacturing facilities and other infrastructure projects require construction equipment.
The broader construction equipment industry had a weak FY26, with total equipment sales declining around 2% year-on-year to 136,995 units from 140,191 units in FY25, according to ICEMA data.