The Changing Face of Leasing in India

Leasing, in India, presents an intriguing narrative. In recent years, it has witnessed significant growth with increasing awareness, new market players and diversification of asset classes. As businesses expand, they require access to capital-intensive assets such as machinery, equipment, and vehicles. Leasing provides an attractive alternative to outright purchasing, as it allows companies to use these assets without having to make a significant upfront investment. Traditionally, leasing in India revolved around equipment and vehicles only. However, in recent times, there has been diversification, as businesses now lease a broader range of assets, including office spaces, IT infrastructure, medical equipment, and construction machineries.

?

The IT industry has been a major driver for leasing in India as businesses prefer leasing equipment to keep up with the latest technology without incurring large upfront costs, while upgrading their IT infrastructure regularly. We are seeing the benefits of leasing in multiple industries, be it in commercial vehicles, where it helps with fleet maintenance, or the construction industry, which gets cost-effective access to expensive machinery and equipment or even healthcare, which lease medical equipment to combat high upgradation costs due to rapidly advancing technology. Another trend we see across industries is an increasing popularity in leasing of commonplace business equipment such as copiers, printers, computers, which offer cheaper alternatives to manage office infrastructure.

?

Also, as India focuses on expanding its renewable energy capacity, leasing solar panels and wind turbines has helped companies to transition towards greener energy sources. Lease providers also face challenges around residual value risks, compliance, funding, and market competition. Players who can effectively navigate these challenges, while leveraging their strengths, are more likely to thrive in the dynamically evolving leasing industry.

?

Leasing in India also faces challenges such as gradual acceptance, tough competition, and risk management complexities. Overcoming these challenges requires a combination of local market knowledge, innovative risk management strategies, and leveraging technological advancements. Advancements in technology, particularly aided by fintech companies, have streamlined the leasing processes. Online platforms, digital credit assessment tools, and automated documentation processes play a catalyzing role in improving efficiency and accessibility. As our economy grows, leasing is expected to become the preferred financial tool for businesses seeking agility and cost-efficiency, promising significant growth with operating leases becoming the driving force across diverse business segments.

?