Leasing sector to play a key role for MSMes: report

A transformative era is on the horizon for India’s leasing sec tor, according to the latest report by FICCI and PwC titled, ‘Unveiling Opportunities: Exploring India’s Leasing Landscape’. The report underscores leasing as a pivotal mechanism for fostering growth across both private and public sectors, with implications for financial inclusion, particularly among micro, small, and medium enterprises (MSMEs).

The ability to access high quality machinery is high lighted as a crucial factor that can drive industries towards the government’s ‘Atmanirbhar Bharat’ and ‘Make in India’ initiatives.

Rajiv Sabharwal, Chair man of the FICCI National Committee on NBFCs and MD & CEO of Tata Capital, emphasized the transformative potential of the leasing industry in India. He said, “The leasing industry in India is at the cusp of transformation, which is being shaped by a multitude of factors that are coming together. These factors include the entry of new players in the market including original equipment manufacturers (OEMs), diversification of asset classes and understanding the benefits of leasing as a financing tool for businesses.” Sabharwal added, “The industry is still at a nascent stage when compared to the progress seen in some of the more developed markets such as Germany, Australia, Japan, the UK and the US.

Conversely, this also indicates that the industry holds tremendous potential for growth in the Indian market as well.” Sidharth Diwan, Partner – Digital & Strategy at PwC India, highlighted the critical role of leasing in India’s journey towards sustainable growth and economic resilience. “As India embarks on its journey towards sustain able growth and economic resilience, the leasing market assumes heightened significance. By fostering in novation, facilitating access to capital and promoting efficiency, leasing emerges as a catalyst for economic development and inclusive growth in the country”, Diwan stated.

The Gujarat International Finance Tec-City (GIFT City) is identified as a major driver for the leasing industry. Its state-of-the-art infrastructure and business friendly environment have attracted both global and domestic companies to establish leasing operations, providing a robust platform for growth.

The rising demand for flexible and cost-effective solutions has significantly boosted interest in leasing services. Companies benefit from accessing assets with minimal upfront costs, enabling them to adapt and upgrade as needed.

This approach aligns with circular economy principles, promoting asset reuse and recycling. Leasing is also making inroads into diverse sectors such as technology, agriculture, and renewable energy, thereby fostering cross-industry collaboration. The leasing industry is undergoing a significant digital transformation, leveraging technologies like robotic process automation (RPA), data analytics, artificial intelligence (AI), machine learning (ML), blockchain, and asset telematics.

These innovations stream line processes, enhance risk assessment, and improve customer experiences. With remote asset inspections powered by drones and augmented reality, the industry is set for a new era of efficiency and improved user satisfaction. There is a growing interest in sustainable and green leasing driven by environ mental concerns. Both lessors and lessees are adopting environmentally friendly practices and incorporating environmental clauses and performance benchmarks in leasing contracts. This trend promotes energy efficiency and sustainability within the leasing industry.