India Inc feels that the measures announced in the Union Budget would invigorate the critical demand drivers of consumption and investment, which would lead to a pick-up in private capex.
Industry captains feel that measures related to digital infrastructure, emphasis on urbanisation and green growth address growth concerns. Further, the 33% rise in capital spending by the government for FY24 will push the overall productivity of the economy and lead to creation of jobs.
Continued support to the vehicle scrappage plan, extension of Customs duty on lithium-ion batteries by another year, and 50 additional sites for improving regional air connectivity are some of the other measures announced in the Budget, which are seen to give a push to investments.
According to Tata Steel CEO & MD TV Narendran, investments in the infrastructure sector have a multiplier effect as these help demand growth in industries like steel, cement, commercial vehicles and logistics. “Private capex will certainly happen, because even last year the steel industry had announced a lot of capex; it was the export duty and some of the macroeconomic issues globally which slowed us down. But even then we are investing, most of our peers are investing and that will continue to be there,” he said, adding, “So, I think capacity utilisation is high and this will be a crucial year for private capex to come back.”
According to Sajjan Jindal, chairman of JSW Group, a 40% increase in the income tax rebate limit from Rs 5 lakh to rs 7 lakh will put more money in the pockets of the middle income group, which will lead to more spending. “The scheme to support Central and state governments and municipalities in replacing their old, polluting vehicles will give a boost to the manufacturing sector, which is largely driven by the auto industry and will bring more efficient machines onto the road,” Jindal said.
Echoing similar sentiments, Sanjiv Bajaj, president, CII, said, “The move to rationalise personal income tax rates will go a long way in increasing disposable incomes, thus giving consumption a leg-up, which will in turn have a salutary impact on India Inc’s investments.”
“The emphasis on increased infrastructure spending and the support for lithium-ion battery manufacturing will be a great multiplier for industry overall,” Sudarshan Venu, MD, TVS Motor Company, said.
“The development of urban infrastructure in Tier-II and III cities will increase the demand for infrastructure projects, consumer appliances and heating, ventilation and air conditioning (HVAC) systems,” Pradeep Bakshi, MD & CEO at Voltas, said. “We also foresee rising demand for construction equipment, considering significant investment in infrastructure projects like railways, road, urban infrastructure and power,” Bakshi added.
Companies such as Jindal Stainless are in the completion phase of the capex it announced two years ago, and by the end of this fiscal, its capacity will grow to nearly 3 million tonne from 1.9 million tonne. “Once the capex announced by the government kicks in, I’m confident that it will drive demand for steel and stainless steel in the country. Once we stabilise our increased capacity, we will be interested in investing further capex to meet the rise in domestic demand,” Jindal Stainless MD Abhyuday Jindal said.
“We are possibly amid a synchronous capex recovery in India. With the revival of private capex investments, India should witness a multi-year capex cycle in the current decade, which augurs well for us. We continue to pursue our stated objective of value-added growth in the projects and services businesses,” SN Subrahmanyan, CEO & MD at Larsen & Toubro, said.