Fresh investment plans by the private sector fell 15.3% in 2023-24, while foreign investors slashed new outlays by almost a third, dragging down the value of new investment announcements in the country almost 5% from the all-time high of almost ₹37 lakh crore recorded in 2022-23.
The drop in private sector investment plans showed up the most in the manufacturing sector, where proposed outlays slid an alarming 40% from ₹19.85 lakh crore in 2022-23 to under ₹11.9 lakh crore in 2023-24, as per the latest data from investment tracking firm Projects Today.
Manufacturing’s share in new investments, declined from almost 54% in 2022-23 to 33.8% of the ₹35.22 lakh crore outlays announced last year. Irrigation and mining investments’ value tanked 48.7% and 19.25%, respectively, while electricity and infrastructure sectors clocked upticks of 96% and 22%, respectively.
State governments led the way on capex growth, ramping up spends on new investment projects by 27% to almost ₹7.69 lakh crore, while the value of the Centre’s fresh projects rose 8.4% to ₹6.09 lakh crore.
Within States, Maharashtra played host to the maximum new projects with proposed outlays of almost ₹8 lakh crore, replacing Andhra Pradesh (AP) which had attracted the most investments in 2022-23. Last year, AP attracted ₹1.06 lakh crore and was ranked ninth among States.
Gujarat retained its second position with its share of investments almost unchanged at about 12%, while Karnataka slid from third to the fourth rank over the past year. Among the big gainers was Odisha, which jumped from fifth rank to third in 2023-24, despite an 11.4% decline in investment value (₹3.23 lakh crore).
Tamil Nadu’s rank among States surged from eighth to fifth, as its share in new investments rose to 7.7%, from under 5% in 2022-23. The State attracted commitments of ₹2.71 lakh crore in 2023-24, constituting an almost ₹1 lakh crore uptick year-on-year.
“We believe that the pace of new investment announcements might slow down in the first quarter of this year due to the extended general election period,” said Shashikant Hegde, director and CEO at Projects Today. “However, with the new government assuming office in June, the flow of fresh investment is expected to gain traction,” he added.
To keep the capex cycle ticking, the new government would not only need to usher in further reforms but also ensure the ₹72.22 lakh crore of investments announced in the last two years see timely execution, he stressed.
“Any delays in implementation of projects, especially those announced in critical sectors like green hydrogen, semiconductors, electric vehicles, transport infrastructure, hydel and solar power, could impede the growth trajectory of the Indian economy in the coming years.” Mr. Hegde opined.
Within the private sector, domestic investors’ investment plans eased 11.5% from almost ₹20.6 lakh crore in 2022-23, while foreign investors’ proposed outlays fell 31.7% or ₹1.5 lakh crore to a little more than ₹3.23 lakh crore in 2023-24. Interestingly, the number of projects announced by private investors grew 28.5% to 4,887, signalling a reduction in the average ticket size of planned projects.
Investments in electricity almost doubled with 401 new projects worth ₹8.07 lakh crore announced last year, compared with 288 projects worth ₹4.1 lakh crore in 2022-23. New infrastructure services and utilities projects worth ₹14.4 lakh crore were the biggest capex driver, accounting for almost 41% of all new investment plans in the country, from 31.8% or ₹11.76 lakh crore in 2022-23.
The number of new infrastructure projects, however, dropped slightly to 7,830, from 7,883. Overall, new project announcements fell marginally from 10,509 in 2022-23 to 10,448, with electricity being the only sector to see an uptick in project numbers.
