Introduction to Equipment Finance in India
For businesses that rely on machinery, tools, or technology, upgrading equipment can be expensive. This is where Equipment Finance in India plays an essential role. It allows companies to purchase or lease equipment without putting pressure on cash flow. From factories to hospitals and from farms to construction companies, equipment financing has become one of India’s fastest-growing financial services.
As India pushes manufacturing under Make in India, demand for affordable and flexible equipment financing has increased significantly.
What Is Equipment Finance?
Equipment finance refers to loans or leasing arrangements that help businesses acquire essential machinery without paying the full cost upfront. It includes:
- Equipment loans
- Equipment leasing
- Hire purchase
- Operating and finance leases
Why Businesses Need Equipment Funding
Businesses depend on machinery to improve productivity, reduce labor costs, and gain a competitive edge. But modern equipment is expensive. Equipment finance makes these upgrades easier by:
- Spreading payments over time
- Preserving working capital
- Offering tax-friendly options
Types of Equipment Finance in India
Equipment Loans
Traditional secured loans where the machine itself acts as collateral.
Equipment Leasing
Businesses can use machinery for a fixed period without owning it. Leasing is ideal for fast-changing industries.
Hire Purchase
Ownership transfers after the final installment. Common in vehicles and industrial tools.
Operating vs. Financial Lease
- Operating Lease: Short-term, no ownership, lower EMI.
- Finance Lease: Long-term, more like ownership.
How Equipment Finance Works
Eligibility Criteria
Typical requirements:
- Minimum business vintage: 1–3 years
- Stable bank statements
- GST filings
- KYC + business registration
Application Process
- Submit documents
- Equipment valuation
- Loan approval
- Agreement signing
- Vendor payment and equipment delivery
Repayment Structure
Repayments are typically EMIs spread over 1–7 years.
Sectors Using Equipment Finance in India
Manufacturing
Machines, CNC equipment, industrial robotics.
Healthcare
MRI, CT scan, diagnostic machines.
Construction & Infra
Earthmovers, cranes, concrete machines.
Agriculture
Tractors, harvesters, dairy processing units.
Benefits of Equipment Finance in India
Preservation of Working Capital
No need to block large amounts of cash upfront.
Faster Technology Upgrades
Leasing helps access new machines regularly.
Tax Benefits
Depreciation and interest deductions lower tax liability.
Low Collateral Requirement
The equipment itself usually acts as security.
Risks & Challenges
Depreciation
Some equipment becomes outdated quickly.
Interest Costs
Higher interest for MSMEs with low creditworthiness.
Maintenance Expenses
Repairs may increase overall TCO (total cost of ownership).
Equipment Loan vs. Equipment Lease: Comparison
Factor | Equipment Loan | Equipment Lease |
Ownership | After repayment | No ownership |
Upfront Cost | Higher | Lower |
Tax Benefit | Depreciation + Interest | Lease expense |
Flexibility | Less | More |
Major Providers of Equipment Finance in India
Banks
SBI, HDFC Bank, ICICI Bank
NBFCs
Tata Capital, Srei Equipment Finance, Mahindra Finance
Fintech Lenders
Oxyzo, LendingKart, Flexiloans, SMFG India Credit
Government Schemes Supporting Equipment Finance
CGTMSE
Guarantee coverage for MSME equipment loans.
PM Mudra Yojana
Loans for small equipment like tools or shop machinery.
Agriculture Subsidies
25–50% subsidy on farm machines under state schemes.
How to Choose the Right Equipment Finance Option
- Compare interest rates
- Evaluate equipment lifespan
- Check lease vs. loan tax benefits
- Calculate total cost of ownership
Future Trends in Equipment Finance
Digital Leasing Platforms
Instant approvals and online KYC.
Subscription / Pay-Per-Use
Growing in medical and construction sectors.
Green Equipment Funding
Solar, EV machinery, energy-efficient tools.
FAQs on Equipment Finance in India
1. What is Equipment Finance in India?
A financial solution that helps businesses acquire machinery through loans or leases.
2. Who is eligible for equipment loans?
MSMEs, corporates, proprietors, startups, and contractors.
3. Is collateral needed?
Usually the equipment serves as collateral.
4. What is better—lease or loan?
Lease for flexibility, loan for long-term ownership.
5. Which banks provide equipment finance?
SBI, HDFC, ICICI, Axis Bank, and leading NBFCs.
6. Can startups apply?
Yes, if they meet minimum turnover/financial criteria.
Conclusion – The Growing Importance of Equipment Finance
Equipment Finance in India is powering growth across industries by making modern machinery affordable and accessible. As technology advances and digital lending expands, equipment finance will continue to support India’s rising manufacturing, healthcare, agriculture, and infrastructure sectors.
For RBI-backed lending norms, visit: 
https://www.rbi.org.in
