India’s private industrial investment cycle is poised to bounce back, ratings agency Crisil said in a research note on Monday, citing a rise beyond pre-pandemic levels in Industrial Entrepreneur Memorandum (IEM) filings with the government, the pace of environmental approvals, and the surge in foreign direct investments.
The Production Linked Incentive (PLI) schemes for 13 sectors and the surge in commodity prices will influence fresh private investments, aided by accommodative monetary policies, lower interest rates, rising merchandise exports and the supply chain diversification underway globally, Crisil projected. The macro and micro triggers for recovering from the collapse in private investments last year include flush global liquidity and healthier corporate balance sheets, it noted.
‘New growth drivers’
“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,” Crisil’s research analysts said in the note, stressing that the new capex cycle will depend on the implementation of government support and policy measures.
Estimating that industrial investments will rise 30% over the period 2021-22 to 2023-24, Crisil said that the PLI scheme had given a ‘much-needed booster dose to flailing capex’, which may have likely taken almost two more years to touch pre-pandemic levels in its absence.
“Actualisation of the scheme will result in aggregate industrial capex rising 1.3 times through fiscals 2022-2024 in comparison to fiscals 2018-2020,” they said.
