The cost of construction equipment vehicles (CEVs) in India is set to increase by 12-15% on average due to the implementation of stricter emission norms and enhanced safety regulations. According to ICRA, this price surge will impact various types of equipment and is expected to be passed on to customers over the next 12-18 months.
Impact of CEV-V Emission Norms on Equipment Costs
The transition to CEV-V emission standards will have varying cost implications depending on the current compliance level of the equipment:
- Equipment upgrading from Stage III to Stage V will witness a substantial cost hike exceeding 12-15%.
- Those shifting from Stage IV to Stage V will see a relatively lower increase of 4-6%.
As per ICRA, these price adjustments are necessary due to the introduction of advanced emission control technologies and compliance requirements. The move aligns India with global emission standards, reducing the gap between Indian and international markets such as the US and EU.
Diesel-Powered Equipment & Emission Challenges
Currently, a majority of construction equipment in India operates on diesel engines, contributing significantly to emissions. With the increasing focus on sustainability and environmental conservation, the government has introduced stringent measures to curb pollution. The CEV-V emission standards, effective from January 1, 2025, will apply to wheeled CEVs, which account for 65-70% of the industry volume. However, non-wheeled equipment, mainly used in off-road applications, remains exempt.
Technology & Cost Implications
The cost impact of emission regulations varies based on engine capacity:
- Small engines (below 19 kW) – Minimal cost impact.
- Higher-powered machines – Significant cost increases due to the adoption of Diesel Particulate Filters (DPF) and Selective Catalytic Reduction (SCR) systems.
For equipment transitioning from Stage III to Stage V, costs will see a double-digit percentage hike. For entry-level CEVs priced at ₹20 lakh, additional expenses could range from ₹2.5-3 lakh. For premium machines costing ₹1 crore, the price increase could be ₹12-15 lakh.
Structural Changes & Safety Standards
From January 1, 2025, new AIS-160 Part 2 requirements will mandate major structural modifications, further increasing costs by 6-8%. These changes focus on improving safety and operational efficiency, in line with global best practices.
Growth Outlook for the Indian CEV Industry
India’s construction equipment sector has grown at a CAGR of 13% over the last decade (FY2015-FY2024). With the government’s Viksit Bharat 2047 vision and a strong infrastructure development push, demand for construction machinery is set to rise. ICRA forecasts industry sales to reach 2.4 lakh units by FY2030, growing at a CAGR of 8-10% from FY2024 to FY2030.
The shift to CEV-V emission norms and upgraded safety standards will lead to a substantial increase in equipment costs. While these changes align India with global environmental policies, they also pose challenges for manufacturers and buyers. With a growing focus on sustainable infrastructure, the construction equipment industry must adapt to these evolving regulations while balancing cost efficiency and technological advancements.