Auto, refinery sectors most optimistic: CMIE

The Indian automobile sector is still optimistic about investments, while many other sectors remain cautious.

Overall, new investment proposals slowed to a trickle in 2011-12, declining by 36 per cent in comparison to the previous year, according the Centre for Monitoring Indian Economy (CMIE).

But in the automobile sector, the value of fresh investment proposals zoomed 160 per cent to Rs 10,000 crore, close to the level seen in 2008-09.

While the aggregate value of both new and old investment proposals in the automobile sector in 2011-12 was still 50 per cent lower than the commitments made during the boom years between 2005-06 and 2008-09, the CMIE asserts the fresh investment reflects confidence in the future demand for transport in India.

Among the new proposals were Renault-Nissan’s plans for a plant in Kancheepuram district of Tamil Nadu to produce 4 lakh cars a year at a cost of Rs 2,700 crore. The investment could go up if the capacity is raised further to 8 lakh vehicles a year.

In addition, Suzuki Motorcyle India has commenced construction of a plant in Rohtak to produce 5 lakh two-wheelers a year at a cost of Rs 2,000 crore, while Honda Motorcyles proposes to set up its fourth plant in India at a cost of Rs 1,000 crore.

The investment optimism has continued into the first quarter of 2012-13. While most of the proposals in 2011-12 were for passenger vehicles, the biggest deal this year so far was Daimler India’s proposed Rs 1,500-crore investment on capacity expansion in Tamil Nadu.

A similar investment commitment has been made for two-wheeler plants, although the amount is distributed over five projects.

Petroleum refinery

The confidence of the automobile manufacturers seems to have rubbed off on petroleum refiners, who made new investment proposals worth Rs 1,21,200 crore in 2011-12 for establishment of new capacities. This is a record level of new investment in the industry and a seven-fold increase from the commitments made in 2010-11.

Among these, IOC has proposed a Rs 30,000-crore refinery-cum-petrochemical complex in Gujarat or Maharashtra, while the BR Shetty Group of Abu Dhabi (International Petroleum Investment Co) has proposed a Rs 30,000-crore refinery in Andhra Pradesh, possibly in the Kakinada-Vizag corridor.

Meanwhile, Nagarjuna Oil Corporation has planned a Rs 12,000-crore refinery at Cuddalore, in Andhra Pradesh and Mangalore Refinery and Petrochemicals Ltd aims to go ahead with an Rs 8,500 crore capacity expansion plan.

Manufacturing dip

The sharp increase in new investment proposals of these industries is in stark contrast to the overall 22 per cent fall in fresh commitments in the manufacturing sector in 2011-12.

Proposals to invest in building of roads, bridges and other transport infrastructure grew more modestly by 14 per cent in 2011-12, while commitments toward railway, air transport and shipping services declined.

Other than these industries, other projects for which fresh investment proposals were made include iron ore mining and pelletisation, LNG storage and distribution, food products and irrigation.

>arvind.jayaram @thehindu.co.in

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