Equipment Rental Industry in India

Equipment Rental Industry in India

Infrastructure development is one of the crucial areas for economic development.

Therefore, it always remains as the focus area for any government. It profoundly contributes to the GDP and helps create growth opportunities for industries like automobile, manufacturing, export, steel, skill development and many more. In India construction is the second largest sector of agriculture which contributes 7-8 percent towards the national GDP. Infrastructure industry is one of the largest employment generators, currently employing about 33 million people. It is one of the main reasons why the central government is planning to invest $1 trillion in infrastructure development during 12th-year plan (2012-2017).

A construction project cannot function with just planning: it needs limbs to complete the project. Construction equipment is vital for every Infrastructure project and that is the main reason for which the industry which grows twice as fast. The construction equipment market is expected to grow by 12% CAGR to $4 billion by 2017.

Construction equipment is divided into four major groups; Earthmoving Equipment: – Earth moving equipment includes backhoe loaders, wheel loaders, steer loaders and tippers. All these equipment holds a large share in this segment and accounts up to about 70 percent.

Material Handling Equipment: – Materials handling equipment contains tower cranes, bulk material handling, mobile & hydra cranes.

Road building equipment: – Road building equipment comprises of scrappers, excavators, and bulldozers.

Concrete Equipment: – The concrete equipment includes transit mixer, batching plant, concrete pumps and aggregate crushers.

Heavy Equipment Rental Business – A Flourishing Opportunity in India About $2.3 Billion construction equipment is sold in India, nearly 7% of equipment is sold to equipment rental companies. Most of the rental companies which dominate the market are regional players. The equipment rental business is quite organized and there is an immense demand for the Equipment & Tools Rentals for Construction market which is expected to grow year on year in days to come in India.

Few interesting developments are now big contractors have started setting up their own heavy equipment rental services and distribution. Surplus heavy equipment in India is

adding positive indices to the growth of the rental business. Earlier equipment for rent was used only for complicated projects like wind energy, thermal power, port construction mega industrial projects etc. Now even for smaller projects, heavy lifting cranes are required on rent, basic equipment like backhoe, cranes pick-n-carry are also required for rent. There has been an upward trend in renting out concrete equipment, excavator, tower cranes and other construction equipment. Overall Industrial Construction Equipment Rentals are the latest trends in the Heavy Equipment Rental Services & Marketplace.

The hiring of materials handling/lifting equipment is the pillar of Indian construction equipment rentals. India’s largest and second-largest equipment rental companies are both primarily crane rental companies. The demand for lifting equipment is always increasing, and there are new entrants coming from Europe and US because of profitable opportunities available in India. The present crane market is for mainly used cranes, where these 10-25 years old cranes are brought from the second-hand market and renovated in India for base operations. There is an urgent need for technology enhancements in the crane market.

Similarly, there is the need for occupational safety for personnel working at heights.

Presently, persons are accessing heights with ladders and scaffolding without any safety harnesses. There is the requirement for inducing the uses of aerial work platforms/cherry pickers for accessing heights. These need to be made mandatory for heights above 10 m.

Utilization is the condition which makes high-value equipment cost-effective. So, for construction companies and smaller contractors who cannot fully utilize a flourishing placer or only need the equipment for a special project within limited time, the rent of a boom placer from a rental company is an appropriate solution. Compared to the international rental business, the rental business in India is growing too.

Benefits of Rental Business 

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Contractors who are interested in hiring industrial construction equipment rental from rental companies are always in profit as they do not invest in purchasing the new asset.

The requirement of the equipment and tool rental for construction is without any capital expenditure which in few cases can rise up to $3M. The maintenance of Fleet and stocking of spares is also saved by going to rental companies.

The complete expenditure on the hiring of any equipment for any duration is treated as revenue expenditure of 100% and is allowed by the Income-tax department as service tax amount paid to be adjusted.

India is emerging as a key international market for equipment rentals. Rental equipment has become one of the leading end-use markets for construction and industrial equipment, and one of the hottest subjects of study. The industry has grown tremendously over the last half-decade. The last few years have witnessed a phase of restructuring in the industry through acquisitions and joint ventures. This reflects the active interest of international majors in the domestic markets. The future prospects of this industry are directly linked to the Indian economy, which is expected to do well in the future.

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