NEW DELHI, India — Ingersoll-Rand India Ltd. is buying a 3 percent stake in Indian Infrastructure Equipment Ltd., an Indian equipment rental firm, according to IIEL's chairman Sunil Kanoria.

Kanoria said demand for construction equipment in India has increased greatly because of the Indian government's emphasis on infrastructure projects and industrial construction. Kanoria told India's Business Standard newspaper that the country is experiencing a shift from long-term lease demands towards short-term leases. He added that 45 percent of demand is on a one-day basis.

According to the Business Standard, about $25 million in annual revenue is being generated by equipment rentals in India. However, rental consultant Daniel Kaplan, a director of IIEL, predicts that number is likely to multiply at least 10 to 15 times in the next three to four years.

“This is an intelligent strategy by Ingersoll-Rand because it will provide them with a channel to market,” Kaplan told RER. “There isn't a lot of machinery in India yet, it's mostly manual labor. I predict other manufacturers will soon follow.”

IIEL recently opened its first branch in New Delhi and will open two more before the end of this year. At present, promoters of SREI International Finance Ltd. hold a 51 percent ownership stake in IIEL, with International Finance Corp., the lending arm of the World Bank, and FMO of The Netherlands each own 20 percent.