Innovative Financing

Solutions: Accelerating
India's Infrastructure
Development
March 2022
Innovative Financing Solutions: Accelerating India's Infrastructure Development

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 Innovative Financing Solutions: Accelerating India's Infrastructure Development

Content
Joint Foreword by Deloitte and ICEMA 4

Infrastructure: An enabler for India's US$ 5 trillion economy 5

The context for infrastructure development in India 5

Accelarating GDP growth 5

 nabling India's manufacturing competitveness through

E
logistics efficiencies 6

 onstruction Equipment (CE) industry: Driven by

C
infrastructure growth 7

Growth drivers for the CE industry 7

Foreign Direct Investment (FDI) and other investments 8

Government policies 8

Increasing demand for infrastructure-related actitivities 8

Untapped opportunities 8

Current state of the CE industry in India 9

Dynamics in the CE market 9

Outlook for the domestic CE market: Impact of

infrastructure investments 10

Opportunities in the global CE market 11

CE financing industry: Current state and disruptive innovations 12

Current state of financing in the CE industry 12

Key customer segment and buying behaviour in CE financing 13

Key challenges faced in financing the CE Sector in India 14

Emerging trends in CE financing 16

Road ahead for CE financing in India 17

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Innovative Financing Solutions: Accelerating India's Infrastructure Development

Joint Foreword by Deloitte and ICEMA

Recognised as a key driver of economic growth well as the financiers face several challenges in
and employment, the global construction financing the sector. Restricted access to finance
industry is poised to grow from US$7.26 trillion arising out of limited options and inadequate
in 2021 to US$14.41 trillion in 2030 (a CAGR of penetration of alternative financing solutions
7.3 percent). Almost 57 percent of this growth is being one of them.
likely to be contributed by three leading To enable the CE industry to play a critical
countries – the US, China, and India. role in infrastructure development, the
Some key initiatives of the Government of India finance ecosystem of the country needs to be
which will place India amongst the top global 3 strengthened. For instance, the government
contributors are Gati Shakti Mission, National could consider according the CE industry with
Infrastructure Pipeline, National Monetisation “priority sector” status for lending, which will
Plan, and Bharat Mala Project. These will also help enhance access to finance for construction
drive economic growth of the country through companies and contractors.
the cascading impact. Industry welcomes the The CE financing industry has been making
accompanying structural reforms initiated by the efforts to enhance access to finance with several
government and the establishment of the NaBFID disruptive innovations, which are outlined in
which will accelerate infrastructure development this paper. The adoption of alternative financing
in the country. methods led by increasing financial and digital
This impending growth in the construction literacy has provided an enabling environment
industry is expected to have a consequent for innovative models to emerge. Against
positive impact on the growth of the Construction this backdrop, ICEMA together with various
Equipment (CE) industry in India. India’s stakeholders across the value chain is working
construction equipment industry is expected towards building a robust financial ecosystem for
to be on a growth trajectory on the back of the CE industry in India.
the Government of India’s plans to invest The Indian CE industry is enthused by the
US$1.4 trillion between FY20 and FY25 and an encouraging words of Mr K V Kamath,
environment enabled by the structural reforms. Chairman, National Bank for Financing
However, the Indian CE industry’s growth is Infrastructure and Development (NaBFID)
being stymied by challenges such as rising input “Infrastructure is the bedrock of a nation. And
prices, availability of skilled/trained manpower, the construction equipment industry makes
and access to finance. Both the borrowers as infrastructure happen”.

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 Innovative Financing Solutions: Accelerating India's Infrastructure Development

Infrastructure: An enabler for India’s

US$ 5 trillion economy
The context for infrastructure development in India
India has traditionally been an infrastructure- 21st century. This would significantly increase
deficient country. However, over the past construction activity in India, which is expected
few years, infrastructure development and to be the third-largest construction market in the
construction have been at the forefront of public world by the end of 2022.3
and economic policy. This is being recognised as Recognising the economic benefits of
a key driver for achieving the government’s goal infrastructure and housing development and
of a US$5 trillion economy by FY 2024-25. This is also its employment generation potential
clearly evidenced by the increase in infrastructure (the construction sector is the second-largest
spend, which is expected to rise from about employment generator in India, after agriculture),
US$1.1 trillion (during FY 2008-171) to ~US$1.4 the Government of India is making a policy push
trillion by FY 2024-25.2 Further, rapid urbanisation with various programmes, such as National
and an increase in nuclear families have created Infrastructure Pipeline (NIP), Gati Shakti, National
massive demand for housing. There is need Monetisation Plan, and housing schemes
to update and modernise public and private to create an enabling environment for such
infrastructure to cater to the requirements of the development.4

Accelerating GDP growth

The Government of India launched the NIP In the Union Budget for FY 2022-23, a year-on-
programme in 2020 to act as an enabler to year increase of more than 35 percent in
provide and infuse funds that India would need capital expenditure was announced with
for infrastructure development. NIP covers the proposed infrastructure spend of more than
period from FY 2020 to FY 2025 and comprises US$130 billion.6
economic and social infrastructure projects with
a total outlay of ~US$1.4 trillion.5

Figure 1: NIP and sector coverage7

Ministry/Department FY 20-25 (USD bn) % of total

Energy 346 23.9%
Roads 277 19.2%
Urban infrastructure 229 15.9%
Railways 193 13.4%
Irrigation 109 7.5%
Rural infrastructure 109 7.5%
Airports 20 1.4%
Social infrastructure 50 3.5%
Telecommunication 45 3.1%
Industrial infrastructure 43 3.0%
Ports 14 1.0%
Agri and food processing infrastructure 9 0.6%
Total 1,444 100%

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Innovative Financing Solutions: Accelerating India's Infrastructure Development

Enabling India’s manufacturing competitiveness through

logistics efficiencies
India has a logistics cost to GDP of ~14 percent One of the key levers to optimise logistics costs
and was ranked 44th in the 2018 Logistics is integrated and seamless multimodal transport
Performance Index published by the World Bank.8 infrastructure, including the last mile connectivity.
With significant investments in the manufacturing The PM Gati Shakti initiative, which was launched
sector, supported by the Production Linked in November 2021, is a national master plan for
Incentive (PLI) schemes that have a total multi-modal connectivity. It is a digital platform
outlay of US$25.6 billion across 13 sectors, to bring 16 ministries, including railways
competitiveness of India’s supply chain becomes and roadways, together for the integrated
a key priority.9 The Government of India aims to planning and coordinated implementation of
reduce logistics costs by five percentage points infrastructure connectivity projects. A Unified
over the next five years (2022-2027) − from the Logistics Interface Platform (ULIP) is planned
current 13−14 percent of GDP to about for data exchange amongst various operators
8 percent of GDP.10 This will enable India to through the application programming interface to
be in the top 25 countries in the World Bank’s achieve regulatory and operational streamlining.
Logistics Performance Index.11 Therefore, logistics
efficiencies driven by infrastructure is a key driver
of the US$5 trillion GDP vision.

Figure 2: Key features of Gati Shakti12

The government's integrated approach – INR 100 trillion

01 project for developing “holistic infrastructure” on the NIP

Aims to make a foundation for holistic infrastructure and

02 give an integrated pathway to our economy

Key Provide easier interconnectivity and reduce travel time.

features 03 Improve industrial productivity; facilitate future
economic zones, and create employment

Expected to enhance competitiveness of domestic

04 manufacturers in the global economy and have a
multiplier effect on investment

Multimodal connectivity of various economic hubs

with roads, ports, and airports - part of the Gati Shakti
05 masterplan; providing manufacturers faster access to the
domestic and international markets
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 Innovative Financing Solutions: Accelerating India's Infrastructure Development

Construction Equipment (CE) industry: Driven

by infrastructure growth
Growth drivers for the Construction Equipment (CE) industry
The CE industry’s growth is directly related figure shows key growth drivers for the industry
to proposed infrastructure development and in India:
investments in new projects. The following

Figure 3: Growth drivers for CE

Increasing
Government
Increase in FDI and demand for Untapped
incentives
other investments infra-related opportunities
and policies
activities

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Innovative Financing Solutions: Accelerating India's Infrastructure Development

Foreign Direct Investment (FDI) and other • Providing long-term interest-free loans
investments (50 years) to states as part of the scheme for
Increase in investments, such as FDI, helps boost financial assistance for capital investment.
the sector’s growth: The scheme aims to facilitate states’
participation in infrastructure development.
• In FY 2021, infrastructure activities accounted
for 13 percent of the total FDI inflows of Increasing demand for infrastructure-related
US$81.72 billion.13 activities
• Increase in private equity/venture capital An increase in infrastructure-related activities,
investments in India has resulted in large especially in urban areas, will lead to high
investments in infrastructure. Indian venture demand for CE:
capital firms have raised an investment of
• The construction industry in India is expected
US$17.2 billion during January-July 2021.14
to reach US$1.4 trillion by 2025.16
Government policies • The real estate industry in India is expected to
The Indian government has been developing and reach US$1 trillion by 2030 and will contribute
implementing policies to support the creation 13 percent to India’s GDP.17
of world-class infrastructure within the country. • India is expected to become the third-largest
This includes building power plants, bridges, construction market globally in 2022.18
dams, roads, and other urban development Untapped opportunities
projects. Some of the recent initiatives include
• High valuations of infrastructure projects
the following:
make the sector attractive for investment.
• The National Bank for Financing • National highways in India present a great
Infrastructure and Development (NBFID) opportunity as only 24 percent of the network
was set up in March 2021 as a development is four-lane.19
finance institution to fund infrastructure • The Regional Connectivity Scheme (RCS) plans
projects in India. to connect underserved airports with major
• For the holistic development and upgrade airports via regular flight services, requiring
of infrastructure, multiple schemes/ infrastructure improvements.
programmes, such as Bharat Mala, the Demand for Construction Equipment Financing
Regional Connectivity scheme, Pradhan (CEF) is linked to performance and growth
Mantri Awas Yojana, Atal Mission for prospects of the construction industry; this is
Rejuvenation and Urban Transformation largely driven by investments in end-use sectors,
(AMRUT), Swachh Bharat, Mass Rapid Transit such as mining, urban infrastructure, roads,
System (MRTS)/Metro, Jal Jeevan Mission, ports, irrigation, power, real estate, steel, cement,
have been implemented through various and automobiles. The construction sector
ministries over the past few years. These has made concerted efforts to automate its
constitute a part of the NIP. The National processes, resulting in higher demand for CE.
Monetisation Pipeline (NMP), which is
expected to bring in an estimated revenue
of INR 6 lakh crore by FY25, will be used for
financing NIP.15

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 Innovative Financing Solutions: Accelerating India's Infrastructure Development

Current state of the CE industry in India

The Indian CE industry is the third largest in the However, it is significantly smaller compared with
world with the total sales of 98,000 units.20 China and the US.21

Figure 4: CE industry sales, 2019 (000’s units)22

320

250

98 85

China USA India Japan

Dynamics in the CE market

The market can be broadly divided into five material handling equipment, and material
main categories: earthmoving equipment, road processing equipment.
construction equipment, concrete equipment,

Figure 5: Share breakdown by state (based on sales volume for FY 21)23

Material processing
equipment, 0.4%

Material handling
equipment, 8%

Concrete
equipment, 6%

Road construction
equipment, 6%
Earthmoving
equipment, 79%
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Innovative Financing Solutions: Accelerating India's Infrastructure Development

Outlook for the domestic CE market: Impact of

infrastructure investments
With the NIP and Gati Shakti in perspective, segments. The market is expected to grow at a
growth in the construction, earthmoving, material CAGR of 12 percent to reach sales of 260,000
handling, and mining segments is expected; units by 2030.24
earthmoving equipment is the largest across key

Figure 6: Growth outlook by segment for the CE market25

Earthmoving equipment Material processing equipment Material handling equipment

(000’s units) (000’s units) (000’s units)

2.3 16.8
210

+9%
+12%
+22%
10.4
1.2
107
7.7
73

0.4

FY21 FY25-P FY30-P FY21 FY25-P FY30-P FY21 FY25-P FY30-P

Road construction equipment Concrete equipment

(000’s units) (000’s units)

16.3 15.8

+13% +13%

8.6
8.3

5.5 5.3

FY21 FY25-P FY30-P FY21 FY25-P FY30-P

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 Innovative Financing Solutions: Accelerating India's Infrastructure Development

Opportunities in the global CE market

In addition to significant opportunities that the global value chain participation. With a CAGR of
Indian market presents, there is a near-term ~7.3 percent, Asia Pacific is expected to be the
opportunity for the CE industry to use global fastest-growing region.26
growth across regions and accelerate India’s

Figure 7: Global CE market size and growth27

Construction equipment market — Market share by region

Growth (USD Bn)
250

21.3% 20.1% North America

Europe

Asia-Pacific
+6.5%
183 LAMEA

25.4% 22.9%

142
133

45.0% 48.4%
45.0% 48.4%

8.3% 8.6%

2020 2021-P 2025-P 2030-P 2020 2030-P

Given the numbers in the above-mentioned from the current level of ~3 million.28 Financing
graphs, India would have a CE industry with and timely completion of infrastructure projects
economies of scale and scope by 2030. The and the resultant use of construction equipment
industry value chain is envisaged to increase would be key for the industry’s growth.
employment by an additional 3.2 million by 2030

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Innovative Financing Solutions: Accelerating India's Infrastructure Development

CE financing industry: Current state and

disruptive innovations
Current state of financing in the CE industry
Large capital expenditure is required to fund key instruments of external financing are buyers/
the CE industry. Thus, financing is a good way suppliers’ credit, loan financing, leasing, and
for the industry to drive demand and increase renting. Loan financing makes up a significant
the customer base. External financing makes portion of external financing in comparison with
up a significant share of the total equipment leasing. Micro, Small, and Medium Enterprises
purchased. Financing used equipment (SMEs) find it difficult to raise financing from
necessitates enhanced due diligence, including banks. Hence, they borrow at a higher rate of
more thorough valuation checks. As there is a interest from non-bank financing corporations
higher risk associated with used equipment, (NBFC). Large entities are predominantly funded
financiers charge a higher rate of interest. The by banks.

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 Innovative Financing Solutions: Accelerating India's Infrastructure Development

Key customer segments and buying behaviour 3. Strategic captive: They are established players
in CE financing in the market and make purchases from a
The key customer segments for CE financing and long-term investment standpoint.
their attached behavioural characteristics are 4. Strategic contractors: They buy machinery/
mentioned below: equipment only after a contract is awarded.
5. Strategic hirers: They have a similar business
1. First-time buyers: They are new to buying CE.
profile to strategic contractors, but manage a
They are price conscious and find it difficult to
fleet of machines/equipment on rent instead
access credit from traditional sources due to
of buying and owning them.
the absence of a credit history.
2. Retail buyers: They are small players who
have purchased CE before. They are price
conscious but also give due consideration
to quality. They typically have a limited
credit history.

Figure 8: Buying behaviour across CE customer segments

First-time Retail Strategic captives/ Strategic hirers

buyers customers contractors

Experience of purchasing CE Low Medium High High

Equipment quality consciousness Low Medium High Low
Price sensitivity Medium Medium High High
Availability of credit history Low Medium High High
Access to finance from banks and NBFCs Low Low High High

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Innovative Financing Solutions: Accelerating India's Infrastructure Development

Figure 9: Major challenges faced in financing the CE sector

Issues
encountered Difficulty in
by infra Underpenetrated repossession Lack of clarity on
developers renting market of assets tax implications
for financial lease

01

03 05 07

02 04 06

08

Limited financing Underdeveloped Regulations Multiple layers

options market for of stakeholders
second-hand
equipment

1. Issues encountered by infrastructure sales are unpopular in India because of lack

developers in case of escalations, of established trading platforms and buyback
financing, and force majeure: Escalation schemes from OEMs.
clauses are inadequate to cover for any 5. Difficulty in repossession of assets: Banks
increase in input costs (e.g., fuel and steel), and NBFCs often face delays in the legal
long drawn claim processes, difficulty in process for repossession of assets.
accessing long-term financing due to a low- 6. Regulations: The regulatory framework can
risk appetite of banks and NBFCs, and no be evaluated and amended to reflect the
recourse in case of force majeure. requirements of both borrowers and lenders.
2. Limited financing options: Construction 7. Lack of clarity on tax implications for
companies and contractors get limited financial leases: There is no clear legal
financing options, especially if they are first- guidance on whether the lessor or lessee
time users, for whom the payment terms are should be regarded as the ‘owner’ of an asset
often unfavourable. to claim depreciation.
3. Under-penetrated renting market: Renting 8. Multiple layers of stakeholders: Navigating
is a good option for users wanting to limit through many layers of contractors and sub-
their large capital expenditure. However, contractors affects efficiency in operations
renting penetration in India is much lower for equipment users and results in limited
than that in other large markets. transparency.
4. Underdeveloped market for second-hand
equipment: Used equipment and secondary

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 Innovative Financing Solutions: Accelerating India's Infrastructure Development

Disruptive innovations in CE financing

Emerging trends in CE financing
The growth in the CE market will be fueled by and evolving opportunities, hassle-free flow of
increased infra-investments, expansion of urban funds becomes crucial. Several new trends are
infrastructure, economic corridors, etc. With the emerging in this space that are disrupting the
CE industry looking to take advantage of new way products are offered and consumed.

Figure 10: Emerging trends in CE financing

Integrated offerings 01 04 Innovative payment options

Automation and focus Emerging trends in Partnerships

on customer experience 02 CE financing
05

Leasing as a new
Ecosystem play 03 06 investment class

1. Integrated offerings: Players offer consuming processes, such as credit decision-

an end-to-end solution, such as asset making. Using the state-of-the-art technology,
lifecycle management, to customers. such as Artificial Intelligence (AI) and big data
This one-stop solution covers evaluation, frameworks, FinTech solutions help lenders
leasing, procurement, insurance services, partially automate the credit decision-making
maintenance, and upgrades to equipment process through enabling auto-approvals
returns. They also offer equipment based on a borrower’s credit history.
recommendations based on business Players also invest in online tools to provide
needs/technical requirements and return greater transparency and improve customer
on investment. experience.
2. Automation and focus on customer 3. Ecosystem play: Platform-based aggregator
experience: Traditional equipment financing solutions (which allow customers, equipment
can take up to a month before the machine manufacturers/traders/lenders, and
is handed over to the customer. The use of financiers to interact seamlessly) and
FinTech has simplified complex and time- hybrid companies (which combine modern

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Innovative Financing Solutions: Accelerating India's Infrastructure Development

technology with traditional channels) are financing. This shift is encouraging equipment
leading this revolution in CE financing. finance companies to find innovative ways to
These ‘phygital’ platforms are differentiating meet demand.
themselves from traditional players in 5. Partnerships: Several OEMs have set up
many ways. They are using conversational captive financing and leasing units. This trend
commerce and franchisee models for is expected to continue. Banks and NBFCs
fulfilment, building networks of right have fostered exclusive partnerships with
suppliers, and leveraging analytics to match construction equipment manufacturers to
demand and supply, AI, and NLP, to make fund their dealers. Banks have also set up
product recommendations and digitise special lease financing verticals.
inventory for their clients. 6. Leasing as a new investment class: Lease
4. Innovative payment options: Customer investing is also becoming popular in the
preference is shifting in favour of managed Indian market as an excellent diversification
services (bundling equipment, services, tool in the asset-backed investment space.
supplies, and software), subscription models, The reach of investment platforms offering
pay-per-use rentals, standard or customised these services is not only limited to high-net-
automated payment schedules (bullet worth individuals and family offices but also
payments, skip payments, etc.), reward cover retail investors.
programmes, and refinancing and alternative

Global examples of FinTechs in CE financing

A US-based platform for construction lending and spending connects construction
lenders with construction companies, general contractors, homebuilders, and other industry
participants in real-time. It aims to improve the flow of capital through the ecosystem. The
company’s leading lending product gives lenders, borrowers, and contractors a centralised
platform to efficiently manage construction loans, eliminate manual processes, and reduce
risks and inefficiencies. Other lending products include asset management and home builder
finance solutions. The platform also offers project documentation and payment management
solutions for construction companies and contractors.

A US-based FinTech offers material financing for contractors and suppliers. By paying
suppliers upfront for equipment and material, and offering contractors flexible 120-day terms
for repayment, the platform aims to alleviate cash flow problems for small-scale construction
companies and contractors.

A multinational financial automation platform offers several products and solutions

to meet CE financing and project management, with an aim of automating workflows and
minimising errors. The company offers a banking platform for contractors, with construction-
specific rewards on debit card purchases. It also offers a financial data forecasting platform
and workflow automation system to improve business outcomes.

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 Innovative Financing Solutions: Accelerating India's Infrastructure Development

Road ahead for CE financing in India

High growth projections for the construction obtaining financing, insurance, and other
sector will have a trickledown effect on formal allied services; and generating revenue
equipment financing, leasing, and rentals. Small opportunities using data monetisation and
construction companies and contractors from tier near real-time demand matching.
2 and 3 cities are expected to drive demand for 2. Co-lending: Financial institutions can
leasing and renting in the next few years. look at co-lending initiatives to take joint
Intervention across the value chain by various propositions to customers with better agility
stakeholders is necessary to create a more and lower costs.
conducive environment for equipment financing. 3. Buyback schemes and used equipment
The following recommendations would deepen exchanges: Such platforms can help aid the
and broaden the CE financing market in India: penetration of leasing and renting in India
by improving the activity in the secondary
1. Emergence of platforms: Platforms will help
market, enabling reach to a wider segment
various stakeholders come together to meet
of customers, and offering better
the ecosystem needs of customers −
end-user pricing.

Figure 11: Platform of the future29

Financing
Access and insurance
2 5
Access to buyers • Access to
and sellers across unsecured finance
multiple geographies • Lower financing costs
• Faster processing
• Choice of financiers
• Customised commercial
insurance
Conversational
1
commerce platform
Employment • Access to a wide network
opportunities of buyers, sellers, renters, Business
3 and borrowers in the services
Connect CE primary and secondary 6
operators with markets. Simplify
construction day-to-day
labour • ‘End-to-end operations with
transaction fulfilment services such as ERP,
skills-on-demand,
travel, tax services,
and advisory.

Awareness
initiatives
4
Collaborate with
industry bodies to
create awareness

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Innovative Financing Solutions: Accelerating India's Infrastructure Development

Key enablers

• Technology and data intelligence capabilities (UI/UX, business rules engine, risk
scores, integration)
• Partnership ecosystem (Financial institutions, logistics providers, insurers)
• Channels (Feet-on-street, anchors and aggregators, referrals)
• Rewards programme (Reward points for transactions and the referral scheme)

4. Use of innovative payment mechanisms: adopt a digital-first approach to cater to an

Emergence of innovative payment increasingly connected and digitised Indian
mechanisms, such as subscription and pay market, making the customer experience
per use rentals, is expected to help reach transparent, instant, and consistent. A special
untapped buyers. Financiers should focus focus should be on providing end of life
on offering innovative payment structures, services and retaining customers. This can
such as: be ensured by providing support on disposal
a. Bullet payments: Pay a lump sum loan of obsolete equipment, offering the right
amount at the time of maturity. price for it, and suggesting an alternative at a
b. Skip payments: Permit payment competitive price.
reductions and abatements for one or a 6. Technology to bring operational
few repayment cycles, to help customers efficiencies for end customers: Using
during bad business cycle/seasonal cash connected technology and Internet of Things
flow issues and in case of unforeseen (IoT) can help bring in operational efficiencies.
risks (such as adverse weather events, Companies use the connected technology
pandemics, and economic crises). for real-time monitoring (of usage, location,
c. Step-up and step-down payments: etc.) and remote management of equipment,
Provide flexibility by allowing customers helping operators boost productivity, reduce
to repay higher or lower principal amount operational costs, and increase profits.
during the beginning of the loan, based 7. Changes in taxation rules: The draft Income
on their credit worthiness, nature of Computation and Disclosure Standard (ICDS)
business, etc. on leases released by the Central Board of
d. Balloon payments: Pay a majority of the Direct Taxes (CBDT) in 2015, provided that the
loan amount at the time of maturity. lessee (and not the lessor) shall be entitled
e. Rent to purchase: Give an option to to depreciation in case of an asset acquired
purchase the rented equipment. under the finance lease.30 However, the ICDS
5. Focus on digitisation and end-to-end on leases is yet to be notified.
services to improve customer experience: 8. Regulatory reform: Financing in India
Equipment financing companies would is primarily driven by priority sector
move to automation route in the current lending requirements of banks. Given the
technology-led market. For example, contribution of the construction sector to
transparency with a process to manage infrastructure development and employment
documentation, including EMI payments. generation, CE financing can be included
CE financing companies should look to under PSL.

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 Innovative Financing Solutions: Accelerating India's Infrastructure Development

9. Streamline the process for CE financing in India is undergoing a

repossession of assets: Create adequate paradigm shift as equipment lease/rental
mechanisms/processes to ensure the gains traction and new avenues, such as
timely enforcement of security. FinTech and LeaseTech, crop up. Despite
10. Promotion of leasing and renting by India’s status as a laggard in adopting
industry bodies: Industry bodies can alternative financing methods, high planned
look at promoting renting and leasing infrastructure expenditure in the public and
as an alternative source of financing, private sectors, coupled with increasing
especially for MSMEs facing capital financial and digital literacy, will fuel demand
constraints and challenges in accessing for these emerging financing options in the
traditional mediums of finance. next few years.
11. Enable large rental companies to
act like an FI: Provide access to credit
history, credit reporting to bureaus, and
legal recourse in case of default to help
rental companies better understand
customers’ intentions and their
willingness and ability to pay.

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Innovative Financing Solutions: Accelerating India's Infrastructure Development

Endnotes
1
Economic Survey 2021-22, Ministry of Finance, Government of India
2
Economic Survey 2021-22, Ministry of Finance, Government of India (https://www.indiabudget.gov.in/economicsurvey/doc/eschapter/epreface.pdf)
3
Invest India sectoral view on Construction in India (https://www.investindia.gov.in/sector/construction)
4
Invest India sectoral view on Construction in India (https://www.investindia.gov.in/sector/construction)
5
Invest India sectoral view on Construction in India (https://www.investindia.gov.in/sector/construction)
6
Union Budget FY 2022-23, Ministry of Finance, Government of India (https://www.indiabudget.gov.in/); US$1 = INR 76.92 (7 March 2022)
7
Report of the task force, National Infrastructure Pipeline (NIP), Department of Economic Affairs, Ministry of Finance, Government of India (https://dea.gov.in/sites/
default/files/Report%20of%20the%20Task%20Force%20National%20Infrastructure%20Pipeline%20%28NIP%29%20-%20volume-i_1.pdf)
8
2018 Logistics Performance Index, World Bank (https://lpi.worldbank.org/international/global)
9
Status of Production-Linked Incentive Schemes, Ministry of Commerce and Industry (https://www.pib.gov.in/PressReleasePage.aspx?PRID=1710134); US$1 = INR
76.92 (7 March 2022)
10
Piyush Goyal, “Govt aims to cut logistics costs by 5 percentage points over next five years”, Ministry of Commerce and Industry
11
National Logistics Excellence Awards Press Release, Ministry of Commerce and Industry (https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1736822)
12
https://www.india.gov.in/spotlight/pm-gati-shakti-national-master-plan-multi-modal-connectivity
13
“India attracted the highest-ever total FDI inflow of US$81.72 billion during 2020-21, 10 percent more than the past financial year”, Ministry of Commerce and
Industry (https://pib.gov.in/PressReleasePage.aspx?PRID=1721268)
14
Ministry of External Affairs (https://indbiz.gov.in/)
15
“Finance Minister launches the National Monetisation Pipeline”, Press Information Bureau (https://pib.gov.in/PressReleasePage.
aspx?PRID=1748297#:~:text=Budget%202021%2D22.-,NMP%20estimates%20aggregate%20monetisation%20potential%20of%20Rs%206.0%20lakh%20
crores,FY%202022%20to%20FY%202025.)
16
Invest India sectoral view on Construction in India (https://www.investindia.gov.in/sector/construction)
17
Invest India sectoral view on Construction in India (https://www.investindia.gov.in/sector/construction)
18
Invest India sectoral view on Construction in India (https://www.investindia.gov.in/sector/construction)
19
Report of the Working Group on Central Roads Sector, 12th Five Year Plan (2012-17), Ministry of Road Transport & Highways, Government of India (https://niti.gov.
in/planningcommission.gov.in/docs/aboutus/committee/wrkgrp12/transport/report/wg_cen_roads.pdf)
20
Indian Construction Equipment (CE) Industry: Vision 2030, ICEMA
21
Indian Construction Equipment (CE) Industry: Vision 2030, ICEMA
22
Indian Construction Equipment (CE) Industry: Vision 2030, ICEMA
23
ICEMA, Deloitte analysis
24
Deloitte analysis
25
Deloitte analysis
26
Global Construction Equipment Market 2020-2027, Allied Market Research and Deloitte analysis
27
Global Construction Equipment Market 2020-2027, Allied Market Research and Deloitte analysis
28
Deloitte analysis
29
Deloitte analysis
30
Draft Income Computation and Disclosure Standards, 2015, Central Board of Direct Taxes (https://www.incometaxindia.gov.in/Lists/Press%20Releases/
Attachments/347/Draft-ICDS-8-1-2015.pdf)

20
 Innovative Financing Solutions: Accelerating India's Infrastructure Development

About Deloitte
Deloitte refers to one or more of Deloitte Touche So, when people ask, “what’s different about Deloitte?” the
Tohmatsu Limited (“DTTL”), its global network of member answer resides in the many specific examples of where
firms, and their related entities (collectively, the “Deloitte we have helped Deloitte member firm clients, our people,
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and each of its member firms and related entities are complex problems or make meaningful progress. Deeper
legally separate and independent entities, which cannot still, it’s in the beliefs, behaviours and fundamental sense
obligate or bind each other in respect of third parties. DTTL of purpose that underpin all that we do.
and each DTTL member firm and related entity is liable
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www.deloitte.com/about to learn more.
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All the facts and figures that talk to our size and diversity
(C) 2022 Deloitte Touche Tohmatsu India LLP”
and years of experiences, as notable and important as they
may be, are secondary to the truest measure of Deloitte:
the impact we make in the world.

About ICEMA
ICEMA is an apex association for construction equipment from the membership which is key to its subsistence. The
manufacturers in India and represents over 80+ leading membership of the association includes OEMs, component
companies that manufacture, trade and finance a wide manufacturers, financiers, banks and insurance companies
range of Construction, Earthmoving, Mining & Material that play a key role in charting out the key policies for
handling equipment used in developing the robust overall economic growth & development of CE industry
world-class infrastructure for the nation. Constituted in in India.
1949 as Tractor & Allied Equipment Manufacturers and
In pursuit of its nation building endeavour, ICEMA supports
Importers Association Ltd., the association started with 10
and guides the CE industry and engages with governments
Indian member companies, primarily manufacturers and
and policy makers in shaping new policies, works towards
importers of tractors, earthmoving and allied equipment.
development of new standards for construction equipment
It was rechristened as Indian Earthmoving & Construction
and creates platforms for knowledge dissemination. The
Industry Association Ltd. (IECIAL) in 1986 with the objective
Association is a bridge between the Indian and global
to make the body a national point of reference for the
construction equipment industry by interfacing with
Indian earthmoving & construction equipment industry. In
international counterparts.
2012, the association was renamed as Indian Construction
Equipment Manufacturers Association (ICEMA), with the A key aspect of ICEMA’s work includes promotion of safety,
objective to make the association a truly representative setting of emission norms, technology integration &
body of the Indian construction equipment industry and to adoption, as well as continuous stakeholder engagement.
expand its scope of services. The association boasts of a To help improve the industry’s efficiency, ICEMA also
stellar legacy of 70+ years. engages in developing a skilled workforce. The Association’s
activities are guided by a Governing Council comprising
ICEMA represents OEMs covering 95% of the total CE
of industry leaders. The objectives are pursued through
Industry in India, apart from other leading companies
various panels within ICEMA that guide the activities of
who manufacture, trade and finance a variety of products
the organisation.
including hydraulic excavators, wheel loaders, backhoe
loaders, motor graders, vibratory compactors, cranes, On the policy issues, ICEMA works very closely with various
dumpers, tippers, forklifts trucks, dozers, pavers, batching Government Ministries/Departments including Ministry of
plants, diesel engines, etc. A non-government & not-for- Heavy Industries, Ministry of Finance, Office of Economic
profit organization, ICEMA serves as a reference point for Adviser (DPIIT), Central Board of Excise & Customs (CBEC)
India’s CE industry. From influencing policy to encouraging and Directorate General of Foreign Trade (DGFT). The
debates and engaging with policy makers, ICEMA articulates association also has strong linkages with other global
the views and concerns of CE industry in India. It serves its partners such as AEM (USA), CECE (EU), CEMA (Japan),
members from the Indian private & public corporate sectors KOCEMA (Korea) and CCMA (China) etc.
and multinationals and derives its strength and sustenance
21
Innovative Financing Solutions: Accelerating India's Infrastructure Development

Connect with us

Shyam Govindan Suchintan Chatterjee PS Easwaran

Partner Partner Partner
Deloitte Touche Tohmatsu India LLP Deloitte Touche Tohmatsu India LLP Deloitte Touche Tohmatsu India LLP
[email protected] [email protected] [email protected]

Amit Bansal Bela Sheth Mao

Partner Partner
Deloitte Touche Tohmatsu India LLP Deloitte Touche Tohmatsu India LLP
[email protected] [email protected]

Contributors
Meenakshi Khurana
Dhaval Doshi
Riya Bhuyan

22
Innovative Financing Solutions: Accelerating India's Infrastructure Development

23
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