India’s infrastructure equipment industry is expected to reach $4.2 billion by 2010, compared to about $1.95 billion in 2004, according to a joint study by the Confederation of Indian Industry and KPMG.

The study said that the equipment rental market in India is poised for dramatic growth, with the penetration of rentals rising from its current 2 percent to the 20 to 25 percent range by 2010, with rental volume of about $700 million.

However, the Indian construction equipment industry lacks the support of a strong vendor base, the study said, and is dependent on imports for many major components such as hydraulic aggregates and steel tubes.

The government and private sectors are expected to spend more than $140 billion on infrastructure between 2004 and 2009, translating to a demand of about $18 billion in equipment.

The biggest organized segment currently is earthmoving and road construction equipment, accounting for about 68 percent of current volume. The market size for Indian tunneling and drilling equipment used in mining applications was estimated at about $216 million. The material handling equipment market was estimated at $160 million, with cranes accounting for more than 60 percent of this segment, followed by forklifts.

Concrete equipment and material preparation equipment combined accounted for about 9 percent of the organized market.

The infrastructure equipment financing industry has grown more than 38 percent in the last three years. Leasing in India had a penetration of 2 percent in 2002, about 5 percent in 2005 and expected to be about 15 percent in 2008.