"We believe growth opportunities arising from India's
supply-side policy steps in recent years, domestic corporates
focusing more on localisation, and multi-nationals looking to
reduce risk in global supply chains may attract higher private
investment in the medium term," analysts at the rating agency
wrote.
"However, progress that is slower-than-expected may present
risks."
The ratings agency said government reforms such as the goods
and services (GST) tax act, bankruptcy code and more recent
measures such as a lower corporate tax rate, the PLI (production
linked incentive) schemes and rising state spending on
infrastructure may further boost investments.
Indian banks have fixed their non-performing loans and
improved their credit costs in recent years and are well
positioned to support the funding needs to corporates, it said.
However, currency pressures from high commodity prices and a
weak global economic outlook present risks to India's investment
demand as it remains a net importer of energy and exports 21% of
its output, Fitch said.
"The capex outlook may also be tempered by rising interest
rates amid inflationary pressures for corporates with a smaller
scale and/or weak financial profile. However, the secular nature
of most capex drivers should mitigate these risks over the
medium term."
(Reporting by Swati Bhat; Editing by Nivedita Bhattacharjee)
MUMBAI, March 28 (Reuters) - The rising capital
expenditure (capex) trend of Indian corporates is likely to
continue and grow at 10%-12% a year during the next fiscal year
to March 2024, Fitch Ratings said in a release on Tuesday.
Fitch said capex was flat over FY19 to FY21 and grew 16% in
FY22. The forecasts are for the 8 state owned enterprises and 21
privately held Fitch-rated corporates in the country.
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