Market Share of Various Leased Asset Classes

Leasing in India is expected to become the preferred financial device for businesses seeking agility and cost-efficiency, promising significant growth with increasing awareness, new market players, and diversification of asset classes. The promising and growth-hungry small and medium Enterprises (SMEs) and startups, having a close eye on capital efficiency, are a confined user base for lease providers to target in the coming time. Though leasing offers benefits such as conserving capital, flexibility, and cost-efficient access to the latest technology, the new leasing players offer tailored leasing solutions to address the unique needs of different industries.

The global Finance Lease market size was valued at USD 840253.2 million in 2022 and is expected to expand at a CAGR of 8.89% during the forecast period, reaching USD 1400594.55 million by 2028. The annual leasing volume in India is estimated at USD 3.67 billion, a rough and conservative estimate. As per London Financial Group data, this should put India in 12-13th place and be the third largest market in Asia, next only to Japan and Korea.

Traditionally, the leasing market in India has been dominated by vehicles and equipment. However, we are slowly seeing new asset classes being introduced in recent times. Office spaces, IT infrastructure, Construction equipment and machinery, medical equipment, office and commercial spaces, aircraft, railcars, etc., are some of the segments that are seeing greater leasing activity in the country.

Based on various news articles and internet sources the market share of Various Leased Asset Classes is shared below.

IT infrastructure leasing: In terms of user industries, the IT industry has been a major driver for leasing in India. Information technology (IT) and telecom sector utilizes asset leasing for IT equipment, servers, data centers, and networking infrastructure. Leasing helps companies in this industry stay technologically competitive and adapt to evolving IT needs. With rapid technological advancements, businesses prefer leasing IT equipment to keep up with the latest technology without incurring large upfront costs yet upgrading their IT infrastructure regularly. While the IT/ITes sector saw a dip in demand, they remained dominant, comprising 26% of the market share. Bengaluru and Chennai were the most preferred locations for office expansion.

Construction machinery leasing:  In the construction industry, leasing is common for heavy machinery, construction equipment, and real estate properties. It allows construction firms to access the necessary resources for their projects without high capital investment. The India construction equipment rental market is anticipated to register a CAGR of about 5.1 % during the forecast period (2020 – 2025).

Medical equipment leasing: In the healthcare sector, leasing medical equipment allows access to advanced medical technology in a cost-controlled manner, and also provides the advantage of periodic upgradation in a capital-efficient manner. India’s Medical Equipment Financing Market size was valued at $4703.6 Mn in 2024 and it will grow to $12528.7 Mn at a CAGR of 11.5% by 2024-2033.

Aircraft leasing: India has a USD 100 bn financing opportunity in aircraft leasing. Primus Partners said that around 80 per cent of the total commercial fleet in the country is leased in comparison to 53 per cent globally. “With growing passenger traffic, India’s demand for aircraft is predicted to reach around 2,100 in the next 20 years.

Machinery/industrial equipment leasing: Manufacturing companies usually lease machinery, industrial equipment, and technology assets. Furthermore, leasing helps them access specialized equipment while managing costs and ensuring production efficiency. Demand for engineering, manufacturing, Banking, Financial Services and Insurance (BFSI), and flexible office spaces have increased by 71% YoY in Q2 2023 in the Indian office market, according to a report by Colliers.

Railcar leasing:  Due to rising urbanization and infrastructure development activities Railcar leasing landscape increasing in India at a high CAGR. The Indian Railways has made several efforts to purge public-private participation in areas such as catering wagon ownership and leasing. Among railcars, box cars capture a major share because they are used to transfer goods that need to be protected from changing weather conditions and precipitations. The market in India is projected to expand from existing 9% at an impressive CAGR of close to 13% through 2030. However, Hooper cars will witness a higher CAGR during the forecast period owing to the fact these cars are used for different types of cargo including coal, gravel grains, and fertilizers.

Office Leasing: India’s pent-up demand for offices in 2023 has reached a historical high of 74.7 msf surpassing the previous record of 2022. Indian firms are significant contributors with more than 40% share in office leasing. Real estate leasing includes office spaces, warehouses, and other commercial properties. Besides this, companies are opting for real estate leasing to secure prime locations for their operations without the upfront investment associated with property purchases.

Commercial vehicle leasing: The transportation and logistics sector relies on leasing commercial vehicles, including trucks, vans, and logistics equipment. Leasing enables companies in this sector to expand their fleets and keep up with the demand for efficient transportation services. Leasing of vehicles, especially commercial vehicles, has gained significant popularity in India. It offers a cost-effective opportunity to maintain fleets without the hassles of ownership and the higher upfront and recurring costs of finance. Also, operating leases for passenger vehicles have become attractive as users can return or upgrade the vehicles at the end of the lease period. The commercial vehicle industry in India recorded a 2% year-on-year growth to 4.65 lakh units during April-September 2023. This comes on a high base of the first half of last fiscal year when the segment recorded 40% growth owing to the post-pandemic recovery.

Car leasing: Over the last few years, the car market lease has accelerated because of new entrants and increased awareness amongst car users. Corporations increasingly prefer to lease vehicles over acquiring vehicles and putting them on their balance sheet. With the launch of more EVs, the personal buyer segment will also offer heft to this momentum. Indian car leasing market comprises approximately 90,000 vehicles. Therefore the annual leasing volume in India is estimated at USD 3.67 billion, on a rough and conservative estimate by 2024.  The projected annual growth rate (CAGR 2024-2029) is 6.80%, resulting in a projected market volume of US$4.39bn by 2029. By 2029, the number of users in the Car rental market is expected to reach 119.80m users. The Global Car Leasing Market size was valued at USD 109.4 Billion in 2023 and is poised to cross USD 254.19 Billion by the end of 2036, expanding at more than 6.7% CAGR during the forecast period i.e., between 2024-2036. In the year 2024, the industry size of car leasing is estimated at USD 115.73 Billion.

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