India Inc to boost capex as Budget drives infra, manufacturing, mining

The Economic Survey released on Friday emphasised that the private sector must take the lead in driving economic growth

With the Union Budget emphasising “Make in India for the World,” along with fresh tax incentives for the middle-class and tax reforms, leaders in India Inc are optimistic that these measures will stimulate fresh investments in the private sector.

 

The Economic Survey, released on Friday, highlighted the critical role of the private sector in driving economic growth, urging it to ramp up investments as the government and public sector companies begin to step back. At present, aside from major players like the Adani, Tata, JSW, Aditya Birla groups, and Reliance Industries, few companies are investing in expanding new capacities.

 

 

The Union Budget on Saturday announced a range of measures aimed at encouraging private investments. 

Dilip Oommen, CEO of ArcelorMittal Nippon Steel India said the budget is demonstrating the Government’s commitment to sustainable economic growth. "With Rs 11.21 lakh crore allocated for capital expenditure, the focus on infrastructure will stimulate growth, especially in the steel sector. Actual spending from the committed outlay within the financial year will set the tone for immediate and future economic growth," he said. 

 

Shashi Kiran Shetty, Founder and Chairman, of logistics and infrastructure group, Allcargo Group said with the steps to boost manufacturing, integrated approach to drive ease of doing business, clean tech manufacturing, the budget has set the roadmap for broad-based growth. "Steps to improve ease of doing business, continued efforts to simplify, rationalize and reform the regulatory framework will have a multiplier impact on the economy. "The strategic investment, alongside the emphasis on port-led growth and enhanced logistics, will create significant growth opportunities, Employment generation by creating an ecosystem similar to what happened in the automobile segment. Additionally, the Rs 1.5 trillion infrastructure allocation is a major boost, ensuring improved connectivity — a key enabler for economic growth," Shetty said.

 

Anil Agarwal, chairman of the mining and metals group Vedanta, said the spirit of tax reform seen in the Budget will extend to other parts of the economy, with trust and self-certification at its core. “This will provide a significant boost to manufacturing and mining,” Agarwal said, adding that mining is one of six key domains identified for transformational reforms over the next five years.

 

“Mining, agriculture, and manufacturing—including electronics, a key government thrust area—can all help increase domestic production, reduce imports, and create millions of high-quality jobs in India,” he said.

 

Anish Shah, group chief executive officer and managing director, Mahindra Group, said that increasing disposable income for Indian consumers would encourage private sector capital expenditure.

 

“The theme of ‘Make in India for the World’ remains central to this Budget, with efforts to lower India’s manufacturing costs set to enhance global competitiveness. Beyond providing an immediate boost to demand and growth, the Budget prioritises long-term progress through substantial infrastructure investments,” Shah said.

 

An outlay of Rs 1.5 trillion in the form of 50-year interest-free loans to state governments for infrastructure projects is expected to encourage public-private partnerships to develop new roads, highways, and metro projects, supporting the cement, steel, and commercial vehicles industries.

 

The capital expenditure by the Union government on major infrastructure sectors has increased at a trend rate of 38.8 per cent from FY20 to FY24, according to the Economic Survey.

 

GP Hinduja, chairman, Hinduja Group, said special impetus to renewables, including energy storage systems, is a clear positive, but added that granting industry status to EV charging infrastructure would have been beneficial.

 

“Maintaining capex levels while lowering taxation is significant but requires more details. With all these moves, the government remains laser-focused on Viksit Bharat by 2047,” Hinduja said.

 

Sajjan Jindal, chairman and managing director, JSW Group, said the government has maintained its thrust on capex, though the Rs 11.2 lakh crore spend is lower than the Rs 13 lakh crore he had hoped for, based on past trends.

 

"But still, capex spend is at a robust level and will give a boost to the core sectors. The boost to micro, small and medium enterprises (MSMEs), by increasing investment and turnover limits and expanding credit guarantees, is a very important step towards increasing the contribution of the manufacturing sector to our economy.

 

 "Creation of a three-year pipeline for PPP (public-private partnership) projects and making the PM Gati Shakti data available for the private sector are important steps that will help the industry plan and execute large projects," Jindal said.

 

India Inc leaders suggest that state governments should roll out initiatives such as single-window clearance systems, set up online platforms for filings and approvals, decriminalise legal provisions, and reduce compliance requirements. Hitesh Sachdeva, partner, Deal Advisory, Infrastructure, KPMG in India, said the Budget accelerates momentum on infrastructure capital expenditure by expanding the fiscal space.

 

“While the central government capex increase has been modest, there is an emphasis on re-catalysing private investment via the PPP project preparation fund and brownfield asset recycling initiatives. The credit guarantee fund aims to kick-start the domestic infrastructure bond market and expand lending capacity for greenfield infrastructure projects in banks and non-banking financial companies (NBFCs),” he added.