Construction equipment major Tata Hitachi on Tuesday said it plans to step up localisation to 75 per cent over the next two to three years to manage costs and contain inflation.

The company also plans to expand its product offering in India and has lined up a capex of around ₹200 crore for 2024-25. The company operates two plants in India — one at Kharagpur in Bengal and the other at Dharwad in Karnataka.

“Localisation is very important to control cost and to maintain lower maintenance cost of the machines. On an average around 65 per cent of our components are localised. In another 2-3 years we should be at 75 per cent,” said Sandeep Singh, managing director, Tata Hitachi.

The company plans to produce 60-tonne dump trucks in India, catering to demand in the mining sector as well as localise the production of 87-tonne excavators.

He said that the company’s Kharagpur plant is the largest excavator plant in South East Asia and the company has already invested ₹1,100 crore towards the development of the plant. The total cumulative capex by the company at both plants is estimated at around ₹2,000 crore.

Tata Hitachi is a joint venture between Tata Motors (40 per cent) and Hitachi Construction Machinery Company Limited (60 per cent). The company is celebrating the 40th anniversary of the partnership in 2024.

Singh said the company has never had any industrial relations issues in Bengal while operating its plant.

He expressed optimism that the infrastructure sector will get a boost from the upcoming Union budget.

“We believe that when the budget is announced in July, a major announcement will be on infrastructure,” he said, adding that it could create growth opportunities for the construction equipment industry.

“The infrastructure sector is doing very well and there is a huge amount of focus by the Indian government on the development of infrastructure,” he said.

In 2023-24, the company has achieved a revenue of around ₹5,000 crore with both plants operating at 75-80 per cent capacity.

“In the next 3-5 years we are looking at an average growth of around 8 per cent,” Singh said.

However, the construction equipment industry is increasingly facing competition from Chinese imports and Indian manufacturers stand to benefit from any protective measures from the government.

India’s construction equipment industry has witnessed a 26 per cent rise in sales to 1,35,650 units in 2023-24 according to data from Indian Construction Equipment Manufacturers’ Association (ICEMA). The industry had sold 1,07,779 units in the previous fiscal year.