|
|
|
Stage set for pvt investment cycle
|
|
|
|
Top Stories |
|
|
|
|
SME Times News Bureau | 24 Oct, 2021
The external environment for the capex cycle in the
current decade will more likely resemble that seen seen in the first
decade of the century (2000's) in terms of global liquidity, monetary
policies and healthy balance sheets, a report based on key economic
indicators has said.
According to the Crisil research report on
economic recovery and pace of investment in the economy, the Industrial
Entrepreneur Memorandum (IEM) filings with the government, the pace of
environmental approvals, and the surge in foreign direct investments
(FDI), the investments have already crossed pre-pandemic levels, all
clearly indicating and confirm a recovery.
As per the report, the
PLI scheme has given a much-needed booster dose to failing capex.
Without it, capex would have likely taken nearly two years to touch
pre-pandemic levels.
Actualisation of the scheme will result in
aggregate industrial capex rising 1.3 times through fiscals 2022-2024
in comparison to fiscals 2018-2020, said the report.
The new
capex cycle will be relatively distinct compared with earlier cycles on
several counts. First, asset-heavy sectors such as metals, cement, and
mining will see more localised investments, led by large players at
their existing sites (brownfield capex). In comparison, asset-light ones
such as phar ma, telecom equipment, mobile, and electronics will see
more greenfield cape x, led by PLI as well as supply chain
diversification. Second, the pandemic- induced focus on digital and
automation will spur growth. Third, rising emphasis on environmental,
social, and governance (ESG) compliance will trigger green capex towards
energy transition, especially for core industrial sectors , said the
report.
Last fiscal, the top 350 of the 15,000 manufacturing
firms (non-infra -- listed and unlisted) on CRISIL's Quantix platform
deferred capital expenditure (capex) because of the Covid-19 pandemic.
This led to an estimated 14 per cent contraction in their capex, albeit
less than a 21-23 per cent decline for the entire industry.
Typically,
the 15,000 manufacturing firms spend Rs 3.2-3.5 lakh crore annually,
with a chunky part of the capex being invested by large firms. The
dispersion analysis of the capex spread shows that 62-65 per cent is
spent by the top 350, 20-22 per cent by the next 1,400 firms, and a
meagre 15-18 per cent by the next 13,000+.
To be sure, the past
decade witnessed a relatively muted private industrial c apex cycle,
especially during fiscals 2013-2017, on weak demand, strong supply and
leveraged balance sheets. While fiscal 2018-2020 did see a revival, it
was largely led by regulatory capex in the oil & gas and automotive
space (emission norms compliance) and large metal firms. Then the
pandemic struck, causing sector-wide capex deferral. but things are
changing this year with a pick up in capex and investments.
Overall,
private industrial capex appears to be getting into a whole new cycle
after the pandemic hiccup -- this time around armed with a new set of
growth drivers. That said, the new capex cycle will depend on government
support and policy measures, implementation thereof, Crisil said.
|
|
|
|
|
|
|
|
|
|
|
|
|
Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
|
|
Daily Poll |
|
|
PM Modi's recent US visit to redefine India-US bilateral relations |
|
|
|
|
|
Commented Stories |
|
|
|
|
|
|
|
|