India Inc lines up capex plans as investment booms

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Post-pandemic solid economic growth, government incentives for manufacturing, rising business prospects, and cheap lending rates, according to 93 per cent of CEOs, business executives, and startup entrepreneurs surveyed in an ET survey, have India on the verge of an investment boom.

A more significant 94% want to put their money where their mouth is and invest in capital projects during the next three years, beginning in 2022. More than three-quarters of respondents predict revenue growth of more than 10% in FY23, indicating robust recovery prospects.

Nearly half of those polled expect a significant rebound in their industries and good capacity utilisation, both of which are necessary for investment recovery. “All signs point to the Indian economy recovering and entering a solid development period,” said Saugata Gupta, managing director and CEO of Marico.

The survey received replies from 56 CEOs from various industries, including manufacturing, services, and infrastructure. According to them, the Omicron version is still the most significant threat to the economy’s revival.

The survey’s findings support a growing consensus that India’s economy will witness a robust investment-led revival in the coming years due to a slew of variables. The Reserve Bank of India (RBI) expects the economy to grow by 9.5 per cent this fiscal year, with the finance ministry predicting a 7% average annual growth rate through the end of the decade.

As the savings rate fell and capacity utilisation fell, India’s investment rate fell to a little over 27% of GDP, down from 34.3 per cent in FY12. Many organisations today appear to be nearing the 80% capacity utilisation mark when it comes to investments. Around 42% reported more than 80% capacity utilisation, while another 26% recorded capacity utilisation of 70-80%.

Infrastructure and transportation, technology, information technology, and telecommunications, manufacturing, especially defence electronics and semiconductors, and pharma and healthcare have been identified as the four most critical industries that will drive investment recovery.

Companies have paid off their debt and are in a solid financial position to expand capacity.

About 53% of respondents stated they had paid off debt, while 40% said they would exclusively fund investments with internal accruals, showing strong balance sheets.

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