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October 08, 2008


Indian CAPEX in Q4soars to USD 174 billion – ASSOCHAM

According to a ASSOCHAM Investment Meter study capital expenditure announcements by the India Inc has soared by 66% QoQ during January to March 2008 quarter to a whopping USD 174 billion from USD 105 billion lined up in October to December 2007 quarter. Mr Venugopal N Dhoot president of ASSOCHAM said that "The huge investments flowing into the infrastructure sector indicate that the economy is getting into the mode of absorbing even more investments in a far more efficient way."

As per the study, while steel has continued to lead the list of sectors attracting highest planned investment for the second quarter in a row following the third quarter, its magnitude has fallen by 28%. Steel with investment announcements worth USD 22.30 billion accounted for nearly 13% of the total CAPEX planned in Q4 of 2007-08 as against almost USD 31 billion in Q3 2007-08. The sector attracted almost a third of the investments proclaimed across the sectors in October to December 2007 quarter. However, few of the announcements made in Q4 could be an overlap of previous months. Fresh investments planned in the cement sector were only about USD 1.5 billion in Q4 of 2007-08 as against USD 4.8 billion in Q3 OF 2007-08.

The ASSOCHAM Investment Meter’s readings of other sectors indicated a planned investment of USD 6 billion in ports & shipping, USD 5 billion in metals, USD 4.5 billion in hospitality, USD 4.5 billion in auto and USD 3 billion in IT & ITES.

The study further revealed that with the investment climate for infrastructure industries improving, corporate India has continued to bet big on this sector. A capital outlay of more than USD 109 billion was announced during January to March 2008 quarter, on top of the USD 85 billion in October to December 2007 quarter.

Mr Dhoot concluded that "Though there seemed to be no sign of postponement or shelving of investment plans in the last quarter of the preceding financial year, high domestic interest rates coupled with drying up of global liquidity may dampen the investment outlook in months to come."