Indian and foreign companies have announced plans to invest about Rs. 5 lakh crore since May this year, when the Narendra Modi-led NDA came to power, signaling a possible revival of the stalled investment cycle that has slowed down India’s GDP growth rate.
This is sharp contrast to the situation prevailing in the last two years when companies put off investment plans citing policy paralysis and poor business climate.
On Thursday, Sajjan Jindal’s JSW Steel said it would invest $22 billion (Rs 1,32,000 crore) to triple its steel capacity to 40 million tonnes per annum by 2025.
This comes just two days after Tata Group chairman Cyrus Mistry announced plans to invest $35 billion (Rs 2.1 lakh crore) over the next three years to expand its various businesses. About a third of this investment will be made in India.
“Earlier, there was a feeling of despondency within Indian industry and sentiment was low. But now, there is a perception that the new government is willing to address the core issues holding back growth,” said Arvind Mahajan, head of infrastructure and government practice, KPMG India.
“There has been a definite turnaround in sentiment,” agreed Eberhard Kern, managing director and CEO, Mercedes Benz India.
On Wednesday, Amazon had unveiled a $2 billion (Rs 12,000 crore) plan to expand its e-commerce business in this country. A day earlier, its homegrown rival Flipkart raised $1 billion (Rs 6,000 crore), which it will spend on beefing up its back end.
Over the last two months, Reliance Industries chairman Mukesh Ambani has announced plans to roll out investments worth Rs. 1.8 lakh crore in sectors like retail, telecom, petrochemicals and oil and gas, while the Adani group is in the process of raising $2.5 billion ( Rs. 15,000 crore) to invest across its interest in the Indian ports, power and mining sectors.
Public sector power producer, meanwhile, has lined up Rs. 30,000 crore to buy power plants from private sector rivals that have run into financial trouble, signaling that it sees better days ahead. Anil Ambani’s Reliance Power recently agreed to pay Rs. 12,000 crore to buy three of Japyee Associates’ hydel power plants.