Capital expenditure in manufacturing gets big push in 2021-22

Private sector capital expenditure (capex) in manufacturing surged by around 150 per cent in 2021-22 year-on-year backed by mega project announcements in steel, cement and auto sectors, Goldman Sachs said in a report.

New investment/capex announcements by the private sector saw a 145-150 per cent increase in FY22, compared to FY21/FY20, Goldman Sachs report showed.

"New investment/capex announcements and ordering activity have seen a sharp pick-up in FY22 (both over last year and pre-COVID levels)," Goldman Sachs noted in the report titled 'Make In India' tracker.

The manufacturing sector, which has lagged for multiple years, saw an increase of 210 per cent/460 per cent in FY22, compared to FY21/FY20.

While the increase was aided by mega project announcements (especially in the Steel sector), the number of projects announced also increased by 80 per cent/140 per cent in FY22, compared to FY21/FY20, the report said.

The growth was contributed by both traditional sectors like petrochemicals, steel, cement and automobiles, and new-age sectors like electronics, e-vehicles and Data Centers.

The government contracts also gave a big push to the Make in India initiative. Contract awarding saw an overall increase of 55 per cent year-on-year in FY22, and the manufacturing sector witnessed a growth of 135 per cent year-on-year.

Growth in awards for infrastructure projects has been decent as well, primarily driven by higher activity in the roads sector.

The report also has a chapter on the Production Linked Incentive (PLI) scheme of the government.

In order to give a push to the 'Make in India' initiative, the Government of India proposed Production Linked Incentive schemes for 13 sectors during FY21, at a proposed incentive outlay of $26.7 billion. This excludes the PLI scheme on semiconductors.

Following approval of the automobiles and auto components PLI, all the 13 proposed PLI schemes have been approved by the cabinet, 10 have received and approved bids with an incentive outlay of Rs 1,108 billion, (excluding incentive for food products), the report noted.

( With inputs from ANI )

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