—
Bidisha Ganguly,
Consultant, Economic Research,
Confederation of Indian Industry
Despite the uncertainties
raised by the global economic
crisis, Indian industry has
remained bullish on its prospects
for growth. This is evident in the
investment scenario currently
unfolding in the country.
While the capex
boom gained pace
from 2004-05, the
high growth of the
next several years saw
Indian companies
pile up cash resources
and plan capacity
additions. The global
downturn arrested
investment, and
shelved planned
projects. However, with decisive
recovery in domestic demand and
revival of exports, Indian companies
appear to have once again
embarked on building capacity.
The boom is visible both in projects
completed and in projects
announced. The manufacturing
sector leads in project completion,
indicating robust revival and
heralding a shift in industrial
activity. The most popular sectors
in Q1 FY11 were chemicals, transport
equipment and machinery
which witnessed highest number
of project completion. Electricity
and services (other than
financial) were other
sectors with highest
volume of project completion
in Q1.
Particularly encouraging
is the new project
announcement for the
quarter, where electricity
outpaces other sectors.
Given the major
constraint of power
cited by industry, if
these translate into capacity, it will
provide a boost to cost competitiveness.
The manufacturing sector
comes in second with outlays
planned in metals and metal products
as well as chemicals and
machinery.