“Manufacturing sector in India attracted live investments worth about Rs 33 lakh crore, ie about one-fifth of the total live investments worth over Rs 164 lakh crore attracted by various sectors across India as of September 2015,” noted the study titled ‘Impact analysis of delay in investment implementation in manufacturing’, conducted by Assocham.
“Metal and metal products alone accounted for almost half (48 per cent) of the total live investments attracted by manufacturing sector in India followed by chemicals and chemical products (24 per cent), machinery (8 per cent), transport equipment (7 per cent), construction material (7 per cent), food and agro based products (three per cent),” highlighted the study prepared by Assocham Economic Research Bureau (AERB).
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Projects with about 37 per cent of the total live investments attracted by manufacturing sector remained under implementation as of September 2015, ie 1,160 projects with investments worth over Rs 12 lakh crore.
Amid states, over 68 per cent manufacturing projects in Rajasthan have remained under implementation followed by Haryana (67.5 per cent), Bihar (63 per cent), Assam and Uttar Pradesh (62 per cent).
“Considering that long delays in projects’ implementation hurts investors’ sentiment, the government needs to have a strong plan to prioritise speeding up stuck projects’ effective implementation by creating a target-oriented roadmap. Even investors should be penalised if projects get delayed due to improper planning, change of ownership, lack of finance, absence of co-ordination with contractors and other related issues,” said D S Rawat, secretary general of Assocham.
Highlighting the impact of delay in implementation of projects in manufacturing sector across India, the Assocham study noted that out of 1,160 projects that are in different stages of implementation, 422 projects have reported time or cost overruns worth about Rs nine lakh crore, ie almost 50 per cent of the actual investment.
Of these 422 delayed projects, only 80 projects have declared employment potential and these projects alone could generate 4.5 lakh employment opportunities. Manufacturing projects in the steel sector are facing maximum cost escalation with a share of over 50 per cent followed by refinery (28 per cent).
Ownership-wise, projects in manufacturing sector that are owned by private players account for over 62 per cent share followed by that of public sector (38 per cent share). Delayed projects facing cost escalation have maximum share of 31 per cent in Odisha followed by Karnataka, Rajasthan and Jharkhand (nine per cent share of each).
Manufacturing projects that are under implementation in Telangana are facing maximum cost escalation of over 73 per cent of the actual cost followed by Odisha (71 per cent), Jharkhand and Rajasthan (66 per cent).