Economists and analysts suggest there are evident signs of revival in capital expenditure in India, though a full-fledged return to normalcy is still over a year away.
In an interview with CNBC-TV18, Vinod Karki, head- strategy research at ICICI Securities; and Deepak Shetty, chairman of CII’s national council committee on capital goods & engineering and MD & CEO of JCB India, spoke at length on capex cycle.
Karki said there are still some amount of challenges in the capex cycle.
“We are still suboptimal in terms of capacity utilisation overall, just below 70 percent as per RBI’s last report. So that’s an issue right now. However, capacity utilization is a function of how demand will pan out and demand outlook is looking resilient and we are seeing a lot of capital intensive companies starting to announce capex plans,” he said.
Shetty said, “Some of the investments on the capex side is also considering the future and while cash flow plays an important role because you want to spend what you have, but at the same time looking at the forecast, for the next 5 years, is also motivating the companies because we are coming out of the second wave of pandemic (COVID-19).”
“The second wave of the pandemic has panned out much differently than the first wave and I am seeing, across the sector, companies looking at opportunities going forward,” he said.
For the entire discussion, watch the video