Why India Inc’s capex plans slowed down in FY24

livemint.com:

₹11.3 trillion worth of new projects were announced across the country during the three months through March, two times the figure in the December quarter, showed provisional data from the project-tracking database of the Centre for Monitoring Indian Economy (CMIE). However, the year 2023-24 ended with ₹27.1 trillion worth of new projects being announced, down nearly 31% after two successive years of sharp growth. The decline in 2023-24 can largely be attributed to the high base of the previous year, when Air India had announced a ₹6.6-trillion deal to buy aircraft in February 2023.

This had propelled capex announcements to grow to a record ₹39 trillion by value in 2022-23. “While there has been a fall compared with 2022-23, the number is still the highest in the last 10 years," said Madan Sabnavis, chief economist at Bank of Baroda. “The fall was discernible mainly in the transport segment (due to the airline orders).

There could be further correction as the airline industry may not be making such announcements again to the same extent. But we should expect other industries to show some increases in value terms." The figure for 2023-24 was higher than the pre-pandemic five-year average. The largest proposal announced in the March quarter was Tata Electronics’ Dholera semiconductor fab plant worth ₹91,000 crore, followed by NTPC Green Energy’s ₹80,000-crore plan to develop green hydrogen and derivatives.