 "india, economy")
MUMBAI (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.
"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.
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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)
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