New Delhi, June 10
Indian corporates are projected to double their capital spending to $800 billion-$850 billion over the next five years, which will be largely financed by operating cash flows and facilitated by ample domestic funding options, said an S&P Global Ratings report on Tuesday.
Barring execution mistakes or negative macro changes, these investments should boost business scale without driving up leverage, the report noted.
“Corporate India is chasing growth opportunities. In our view, Indian companies are well positioned for a growth run. Balance sheets are the leanest they've been in years. Companies are investing to meet demand underpinned by favourable government policies and a positive economic outlook,” according to the credit rating agency.
Successful execution of plans would enlarge their operational scale, providing lasting cost benefits and business efficiencies.
Higher investments in power, particularly renewables, will be a major spending area. Power, including transmission, combined with airlines, and emerging areas like green hydrogen, will (by estimates) account for about three-quarters of the increase in capex over the next five years.
“In absolute terms, investments in airports could double, or even triple during this period. Conventional sectors such as steel, cement, oil and gas, telecom and autos will grow at a more steady pace of 30-40 per cent,” said the report.