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Proactive decisions and some positive signals sent out by the BJP-led NDA government in the first 30 days, have succeeded in evincing positive response from India Inc. which had put their big capex plans on hold for various reasons.
The first major announcement from the Union Government came in the form of clearing seven mega projects worth Rs 21,000 crore which were stuck for decades due to environment and financial issues. These include the 1,440 MW coal-based power project of RKM Powergen.
Similarly, to kick-start the investment activities in the roadways sector, the Union Ministry of Road Transport and Highways approved highway projects worth over Rs 40,000 crore in the states of Jammu & Kashmir, Himachal Pradesh, Uttarakhand and the north eastern region. Nearly half of the projex cleared are two laning and four laning of national highways in Jammu & Kashmir. Another slew of roadway projects worth Rs 15,000 crore was announced for the north eastern region of the country.
To increase the pace of clearance of project proposals, the new government has proposed setting up a single-window clearance system for capital-intensive projects in the steel, coal and power sector. The new system will accelerate the execution of several greenfield and brownfield projects which have been held up due to lack of environmental and forest clearances. To expedite the process, the Ministry of Environment and Forests is also paving the way for a major structural change in its project clearing mechanism. From 1 July 2014, all applications for environment clearances and ToR will be accepted online only and the expert appraisal committee will have to complete their appraisals within five to 15 working days.
Another notable announcement of the Union Government was scrapping of the UPA's Jawaharlal Nehru Urban Renewal Mission (JNNURM) scheme. The New urban development and housing minister Venkaiah Naidu announced that JNNURM would soon be replaced by a new mission which would focus on a modern concept for developing cities enabled with the latest technology and better connectivity. BJP, in its election manifesto 2014, had proposed building 100 new smart cities .
In a bid to promote India as an electronics manufacturing hub, the Union Ministry of Communications and Information Technology has identified eight cities - Ahmedabad, Aurangabad, Gandhinagar, Ghaziabad, Nagpur, Nasik, Thane and Vadodara, where companies setting up greenfield facilities will be eligible for incentives. The Ministry also announced setting up electronic manufacturing clusters in eight cities including Bhubaneshwar, Hyderabad and Hosur.
Projex revival
Showing faith in the government’s initiatives, India Inc responded by announcing major projex plans within days after the government took office. Along with conglomerates like Reliance Industries and Tata group, several other promoters have announced their investment plans.
Reliance Industries will invest Rs 1,80,000 crore across its businesses, including telecom and oil and gas over the next three years. RIL's focus in FY15 and FY16 will be on retail, petrochemical and telecom investments. Reliance's telecom subsidiary, Reliance Jio, will launch its commercial 4G telecom service in a phased manner in 2015, with an investment of Rs 70,000 crore.
Tata group has announced capital expenditure of over Rs 65,000 crore for the ongoing fiscal. The bulk of the investments will be by Tata Steel and Tata Motors which have lined up projex of Rs 16,500 crore and Rs 38,500 crore respectively.
Essel Group has signed a memorandum of understanding to invest Rs 20,000 crore in areas like urban development and distribution of power in Uttar Pradesh. Suzuki Motor Corporation (SMC) of Japan, the parent company of Maruti Suzuki, announced plans to invest Rs 18,500 crore in setting up a new car manufacturing plant in Gujarat.
Apart from the above big ticket projects, major hotel groups and retail companies have announced their intentions to expand their presence across the country over the next three to four years.
While the surge in projex announcements bodes well for the country starved of project investments in the last couple of years, the key to the revival in projex activities is faster execution of the above mentioned projects. Here, the new government’s stand on FDI, taxation matters, pricing of oil and gas, and auction of coal mines will set the pace of growth of project investment in India in the next five years. The upcoming union budget is expected to set the ball rolling in this direction.
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