Steep US tariffs threaten to disrupt India’s equipment manufacturing and rental markets

India’s construction equipment market has been one of the fastest growing in the world, fuelled by rapid urbanisation, huge infrastructure projects, and a wave of foreign investment. Yet this trajectory is now under threat as US tariffs — among the world’s steepest — risk squeezing Indian manufacturers, disrupting supply chains, and reshaping the country’s rental and access equipment industries.

In July, US President Donald Trump announced a 25% tariff on Indian goods, citing stalled trade talks. Weeks later, he unexpectedly doubled the levy, adding a further 25% penalty for India’s continued purchases of Russian oil and weapons. The 50% tariff package came into effect on August 27.

The Indian government has acknowledged the scale of the problems. “Economic selfishness is on the rise globally and we mustn’t sit and cry about our difficulties, we must rise above and not allow others to hold us in their clutches,” Prime Minister Narendra Modi said, announcing tax cuts to mitigate the impact. “We should become self-reliant — not out of desperation, but out of pride,” he added.

For India’s construction equipment industry, the measures have landed at a delicate moment, just as many global brands are positioning themselves to participate in the market. India’s economy has been growing at a phenomenal rate, making it the fifth largest in the world. With GDP at around US$4 trillion, the country is expected to see growth of up to 7% in 2025. That expansion has made India a crucial frontier for global construction equipment manufacturers, many of whom are diversifying away from China.

Construction equipment manufacturers have already been seizing opportunities. Genie, JCB and Manitou have set up production facilities, while Palfinger is investing €25 million in an assembly plant for cranes and aerial platforms. Smaller partnerships are springing up too: Italian low-level access OEM Axolift has teamed with Mumbai-based Gemini Power Hydraulics.

“With the US and European markets down economically, India has been a focus and every few months another manufacturer sets up an office in India,” said Anirban Ghosh, formerly JLG’s India representative and now CEO of distributor Nexa Global Infra Solutions.

Former UK prime minister Boris Johnson opening JCB’s Gujarat factory in April 2022. Photo: JCB

Chinese MEWP makers are also expanding rapidly, with six establishing bases in the past 18 months. Components supplier Eddie Precision has announced plans for a major hydraulic parts facility.

“After decades of being focused on China, winning in India is set to become the new growth battleground for all construction OEMs,” a recent report by Off-Highway Research and consultancy abcg says.

The potential is huge. The Aerial Platform Association of India (APAOI), formed in 2015 with just 10–15 members, now represents 120–130 companies across technology, safety and training.

Ghosh forecasts that the number of MEWPs imported into India could grow by 40–50% within five years, from the current base of around 16,000 machines. Other commentators are even more bullish, projecting growth to more than 40,000 units.

That would still leave India far behind China, which has seen its MEWP population soar to 700,000 units in the same timeframe. Analysts note that while India’s government is encouraging growth, it has not yet offered direct state support to manufacturers.

Impact on manufacturers

High US tariffs now cast doubt on India’s long-standing strategy of attracting global manufacturers keen to diversify away from China. If it costs more to export from India than from rivals such as Vietnam or Bangladesh, investors could shift their priorities.

The tariffs are also expected to reverberate through India’s still-fragmented rental industry. India currently has around 150–160 rental companies, ranging from fleets of 2,000 machines to smaller operators with a few hundred.

The mix of machines in Indian rental fleets has been evolving rapidly over the past decade. As infrastructure developments demand greater efficiency, India’s market is beginning to resemble those of developed economies.

Manitou Group inaugurating a new spare parts logistics centre in Greater Noida, India in 2023. Photo: Manitou.

Tariffs are expected to have a knock-on effect on equipment pricing and supply chains. Many Indian rental firms rely on imported components, from hydraulic parts to electronic systems, some of which originate in the US. A 50% tariff will raise costs sharply for these imports, increasing the price of both new machines and replacement parts.

While manufacturers are likely to absorb some of the pain in order to stay competitive, analysts believe rental companies will eventually face higher acquisition and maintenance costs. Smaller operators with thinner margins could be hardest hit, particularly those with fleets built on imported machines.

India’s growing reliance on Chinese suppliers may cushion some of the blow. Despite political tensions, imports from China have surged, reaching $114 billion in the year to March — 75% more than five years ago. For rental firms, this offers an alternative source of parts and equipment at lower prices. But the shift could deepen India’s dependence on its northern neighbour at a time when Delhi is trying to reduce strategic vulnerabilities.

For customers, the immediate effect may be higher rental rates as companies pass on costs. Longer term, the squeeze on margins could slow the pace at which the market transitions from used to new equipment — a change that had been seen as key to attracting foreign rental giants and boosting safety standards.

Nonetheless, Ghosh predicts that whatever happens with tariffs, the market has a long way to mature before it is likely to attract many overseas players.

India’s rental market

“It would be difficult for a company like United Rentals to expand in that way [by buying up small rental firms] and I don’t see them coming into the market until it reaches at least 25,000 units,” Ghosh says. “The market is too fragmented.”

Still, domestic demand underpinned by government-backed programmes and a population of 1.45 billion remains robust. Modi’s promised tax cuts may offer short-term relief, while gradual improvements in training, safety and technology are helping the market mature.

Moreover, the industry has always prided itself on steady, not boom-and-bust, expansion. As Rajiv and Aahan Sethi of Gemini Power Hydraulics put it, “In India we have steady growth that goes hand in hand with the requirements of the time.”

For now, the industry must brace for uncertainty. If tariffs persist, India’s ambition to become a global manufacturing alternative to China may fade. The risk is not just economic but reputational: investors could begin to see India as a less reliable base for global supply chains. Yet with long-term demand for access equipment assured by megaprojects and urban growth, the country’s rental market is still likely to keep climbing — albeit more slowly than once hoped.