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Furthermore, as seen in the   share in new project    Additionally, while new     investments made by the                                        value of completed projects at                        Most of the completed projects
        graph below, private sector   announcements from 65.0 per   project announcements are a   government contracted both    SERVICES (OTHER          Rs 1.01 lakh crore in the    MAHARASHTRA AND          in Maharashtra were in the
        has always had a higher share   cent in Q2 FY24 to 87.6 per   good barometer of business   on a sequential and annual   THAN FINANCIAL)          quarter, with most projects   UTTAR PRADESH           housing construction, transport
        in new project             cent in Q3 FY24, while that of   sentiments, the value of   basis to stand at Rs 138.4 lakh   SECTOR WITNESSED        related to road and air      EMERGE AS TOP            infrastructure services and
        announcements than the     the government fell steeply   ongoing investments is a   crore, its share in the total       THE HIGHEST VALUE        transport infrastructure     STATES WITH HIGHEST      storage & distribution, while for
        government. The recent     from high of 35.1 per cent in   better indicator for gauging   ongoing investments           OF COMPLETED             services, along with transport   VALUE OF COMPLETED   Uttar Pradesh, the projects were
        quarter witnessed a sharp   Q2 FY24 to 12.4 per cent in   the investments happening on   remained high at around 56     PROJECTS IN Q3FY24       logistics services. This was   PROJECTS IN Q3 FY24    in the road transport infrastruc-
        uptick in private sector’s   Q3 FY24.                 ground as it nets out the   per cent.                                                      followed by the manufacturing                         ture services and hotels &
                                                              value of stalled projects from                                                             sector, in which most of the                          restaurants. Rajasthan reported
                                                              outstanding projects.       Completed                            On a sectoral basis, the   completed projects were                              completed projects in road
                    Share in New Project Announcements (%)                                                                                               related to organic chemicals   A state-level analysis shows   transport infrastructure services
                                                              Latest data suggests that   Investments                          services (other than financial)                       that Maharashtra, Uttar   and education. Madhya Pradesh,
          100.00                                              while the total value of                                         sector witnessed the highest   and drugs & pharmaceuticals.  Pradesh, Rajasthan, Madhya   on the other hand, reported
                                                      87.6
          80.00                                               ongoing investments                                                                                                    Pradesh and Tamil Nadu    completed projects in drugs &
 ew project   60.00                                           moderated albeit marginally   The value of completed                                                                   emerged as the top five states   pharmaceuticals, while for Tamil
 announcements in the                                         to Rs 247.8 lakh crore in Q3   projects slumped on both                  Sectoral Breakup of Completed Projects        with higher number of     Nadu it was in the housing
 third quarter of the current   40.00                         FY24 from Rs 248.1 lakh     sequential and annual basis                             (Rs lakh crore)                    completed projects in Q3   construction sector.
 fiscal (Q3FY24) slumped on   20.00                   12.4    crore in the previous quarter,   standing at Rs 1.35 lakh crore                               Q2 FY24    Q3 FY24       FY24.
 an annual basis, while marginal   0.00                       it was higher than Rs 234.4   in Q3FY24 as compared to Rs
 growth was recorded in                                       lakh crore in the           1.67 lakh crore in the                 Services (other than financial)  0.80    1.01
 comparison to the previous   Q2 FY22  Q3 FY22  Q4 FY22  Q1 FY23  Q2 FY23  Q3 FY23  Q4 FY23  Q1 FY24  Q2 FY24  Q3 FY24  corresponding quarter last   previous quarter and Rs 1.86             States with Higher Value of Completed Projects in
                                                                                                                                                                                                      Q3 FY24 (Rs lakh crore)
 quarter. The overall new   Government  Private               year, marking a growth of 5.7   lakh crore in the comparable        Transport services          0.49       0.82           0.14
 project announcements in   Source: CMIE Capex database & CII Research  per cent in year-on-year   quarter last year.                                                                   0.12  0.13    0.12    0.11
 Q3FY24 stood at Rs 2.21 lakh   There has also been a         terms.                                                             Manufacturing                0.48       0.17           0.10
 crore, a tad higher than Rs   noticeable improvement in                                                                                                                                0.08
 2.01 lakh crore in the   capacity utilization of some   from CMIE, the new projects   A break-up of data showed   VALUE OF COMPLETED   Chemicals             0.12       0.07                                           0.07
 previous quarter, while the   sectors, especially the   MANUFACTURING   announced under the sector   that private sector   PROJECTS SLUMPED                                            0.06                                   0.05
 level was less than even half of   manufacturing sector.  This   SECTOR ATTRACTED   mainly comprised of chemical   investment, measured by the   IN Q3FY24  Construction material  0.02  0.06  0.04
 Rs 9.66 lakh crore recorded   evidence gets strengthened by   MORE INVESTMENTS   products, metal products and   value of ongoing investments,                                          0.02
 in the corresponding quarter   results of various surveys   IN Q3FY24  increased to Rs 109.3 lakh   The data suggests that the   Electricity                 0.05       0.12           0.00
 last year.   conducted by CII, to gauge   transport equipment. Other   crore in Q3FY24, registering a   decline in value of completed                                                      Maharashtra Uttar Pradesh Rajasthan  Madhya Pradesh Tamil Nadu
                                   sectors attracting higher level
 the on-ground recovery. As        of new investments include   double-digit growth of 17.1   projects was driven by both        Source: CII Research analysis based on CMIE Capex database     Source: CII Research Analysis based on CMIE Capex database
 The sequential growth in new   per the latest round of the   At the sectoral level,   services (other than financial)   per cent on an annual basis,   government as well as the
 project announcements was   CII-Business Outlook Survey   between 75-100 per cent   range of 75-100 per cent,   manufacturing sector, despite   and electricity. Within   also marking an improvement   private sector, which value of
 led by the private sector,   conducted in the month of   during Q3FY24. In an   which is noteworthy as   weak external demand,   from the previous quarter. On   completed projects in the
 which grew by 48 per cent   December 2023, 45 per cent   encouraging sign, in the last   capacity utilization needs to   attracted higher investments   services, transport services   the other hand, even though   private sector contracting at a   Going forward, government’s   Further, to build consensus on   could become the single point   Commerce Ministry, External
                                   did well.
 on-quarter. On the other   of the respondents felt that   two surveys too, majority of   be maintained between 75-80   in Q3FY24. As per the data   the value of ongoing   faster rate on an annual basis.  continued push for capital   land, labour and power reforms   of contact for facilitating the   Affairs Ministry, etc., besides
 hand, the new project   capacity utilization in their   the respondents expect their   per cent to fuel fresh                 expenditure, at both the   at the state level, the successful   opportunities for investment in   other sectoral ministries, State

 announcements by the   company would range   capacity utilization to be in   investments in the economy.                      central and state levels, will   model of GST Council could be   India as well as for Indian   governments, other Institutions
 government plummeted both   Sectoral Breakup of New Project Announcements  Trend in Value of Completed Projects (Rs lakh crore)  not only help crowd-in   adopted.                  investors to invest abroad.   and regulators like RBI, SEBI,
 on sequential as well as an   (Rs lakh crore)                                                                                 private investment at a higher                        Currently, the process of   Stock exchanges, Banks, FIPB,
 annual basis during the period.                                                                                               level, but also stimulate   CII has also recommended   investment for foreign investors  Invest India, etc.
          Sectors                    Q2 FY24    Q3 FY24        3.5                                                             demand in other sectors   setting up of an independent   needs clearances from Finance
 Encouragingly, the high   Manufacturing  0.77   1.40           3  2.91                                                        through its multiplier impact   Ministry for Investment, which   Ministry, Home Ministry,
 frequency investment                                                                                                          on growth.
 indicators have remained   Chemicals  0.14       0.64         2.5                           2.16
 healthy in the year so far.                                    2  1.38                 1.86                                   It is important to invigorate
 Moreover, data on net fixed   Metals  0.06       0.28                  1.42       1.40  0.54  0.86  1.54  1.67                private investments further
 assets of 2000+ odd                                           1.5            1.25                     0.37  1.35              and the government can take
 companies extracted from   Transport equipment  0.10  0.17     1       0.55      0.43            0.96      0.34               initiatives like expanding the
 CMIE Prowess database                                             1.53      0.74      1.31  1.30      1.30                    PLIs to some of the
 showcase an increasing trend   Services (other than financial)  0.43  0.39  0.5  0.87  0.52  0.97  0.58     1.01               labour-intensive sectors such
 in H1 FY24, reaching its                                       0                                                              as footwear, toys, etc; come

 highest value in seven                                           Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24  up with an Employment
 quarters. The continuous   Transport services   0.37  0.22              Government  Private Sector  Total investments         Linked Incentive Scheme (ELI)
 uptick in value of net fixed   Electricity  0.78  0.37                                                                        for select employment
 assets reflects that companies                                                                                                incentive sectors; address
 are more and more in favour   Source: CII Research Analysis based on CMIE Capex database                                      issues related to the Cost of
 of investing, despite the                                               Source: CII Research Analysis based on CMIE Capex database  Doing Business, etc to help
 uncertain economic                                                                                                            revitalise private investment
 landscape.                                                                                                                    in the economy.


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 according to Niti Aayog and   are hesitant to   under Article 6 of the Paris   consider implementing a
 RMI. The move encourages   finance/refinance large-scale   Agreement. It will help   nationwide policy mandating
 manufacturers and project   green hydrogen projects.  create a marketplace for   the use of Green M15 fuel i.e.
 developers to invest in green   •  The production cost of   Indian green fuels like green   mixing 15 per cent green
 hydrogen and its derivatives   various green fuel   hydrogen and its   methanol with petrol, in
 like green ammonia and   technologies, such as green   derivatives, green methanol,   transportation and other
 methanol, putting India among   hydrogen and its   and SAF, among others, in   applicable sectors, supported
 those leading countries, such   derivatives, is higher.   the international market.  by incentives for producers
 as the United States and the   However, grey hydrogen,   •  There’s a need for speeding   and consumers to adopt this
 European Union, which have   alongside various grey   up strategic interventions   fuel. This could be a pivotal
 allocated public funding for   manufacturing methods, has   for the Green Hydrogen   step in India's journey
 green hydrogen.  towards a greener and more
 historically benefited from   Transition Program by
 subsidies. Without a robust   offering incentives for both   sustainable future.
 Establishing a market for green   and liquid global carbon   green hydrogen production   •  To ensure widespread
 ammonia and methanol is a   market, pricing the value of   and electrolyser   availability of Green M15 fuel,
 global issue. In India,   carbon and embedded   manufacturing. These   there’s a need for investment
 forward-thinking standards by   emissions in the production   initiatives will catalyze   in the necessary
 the Bureau of Indian Standards,   and usage of grey hydrogen   industry growth.  infrastructure for its
 such as blending DME with   becomes challenging. This is   production, distribution, and
 LPG and methanol with diesel,   why, initially, green   •  The cost of renewable   storage.
 are significant steps towards   hydrogen seems more   energy can be further
 integrating green fuels.  reduced through energy   •  Campaigns should be
 expensive than grey   surplus banking provisions,   launched to educate the
 hydrogen.
 especially for sectors   public and other stakeholders
 •  The cost of funding remains   mandated to use green   about the benefits of using
 a persistent bottleneck,   hydrogen.   Green M15 fuel and address
 presenting a considerable   •  The government should   misconceptions.
 challenge for project   implement targeted
 developers, impacting the   incentives to boost the   By adopting these
 optimization of capital   export of green molecules.   recommendations, India can
 expenditure and project   It will help establish India as   make significant strides towards
 execution.  energy self-reliance,
 a global leader in   environmental sustainability, and
 renewable energy.
 Suggestions  •  A mechanism should be   economic growth.

 developed to facilitate   Conclusion
 Challenges  To address the challenges, we   low-cost financing and
 provide benefits like
 suggest that the government
 take several steps to provide a   accelerated depreciation   This is the time to take
 Despite government efforts   much-needed boost to the   for green hydrogen   immediate action to overcome
 to promote green hydrogen   industry, such as:  infrastructure investments.  all the bottlenecks on the road
 and its derivatives, the sector   •  The government should   towards leading the global
 is still in its infancy, and   •  As in the initial days of   expand the FAME India   transition to sustainable energy.
 acknowledging and addressing   renewable energy, the   (Faster Adoption and   With right policies in place and
 the hurdles that impede our   government mandated its   Manufacturing of (Hybrid   the development of a market for
 full potential in this critical   usage through Renewable   &) Electric Vehicles in India)   green methanol and ammonia,
 sector is essential. Among the   Purchase Obligation (RPO).   Scheme to include green   India can unlock the full
 various challenges are -  potential of green hydrogen and
 Similarly, we suggest that a   methanol vehicles in it. It   its derivatives. Moreover, it will
 •  There isn’t much existing   quota should be mandated   will not only boost the   provide a much-needed boost
 demand and a developed   for the use of green   market but also provide   for the production, distribution,
 market ecosystem for   hydrogen in sectors like   support to the green   and usage of green hydrogen and
 green hydrogen and its   fertilizers, chemicals, steel,   hydrogen ecosystem in the   its derivatives across sectors.
 derivatives like green   and power generation.   country.  Such initiatives will not only help
 ammonia and methanol, not   Creating demand through   •  There’s a need for funding   India in achieving targeted
 only in India but also   policy will spur sectoral   and support for research   climate goals but also position it
 globally, compared to other   growth and reduce the   and development in the   as a leader in the green energy
 conventional fuels.   production cost of green   areas of green hydrogen   revolution.
 hydrogen.
 •  Project developers face   and methanol-based
 difficulty in getting final   •  Leveraging its international   technologies. It will further
 offtake agreements signed.  relations, the government   help enhance efficiency and
 should expedite the signing   reduce costs.
 •  In the absence of advance
 offtake contracts, lenders   of bilateral agreements   •  The government should
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