Private capex is on the rise: CII President Rajiv Memani

Confederation of Indian Industry (CII) President, Rajiv Memani, has countered prevailing market sentiment about private capital expenditure, asserting that while there's a perception of a slowdown, private capex is actually taking place across various industry sectors in the country.

"There's an atmosphere suggesting that private capex is not happening, but actually capex is happening," Memstated, citing data showing consistent private investment over the past three years.

The CII President pointed to robust corporate fundamentals as evidence of ongoing investment activity. "If you look at listed companies and attend their AGMs, you'll find that CII members are looking to increase capex. Everyone has strong balance sheets, low debt, and the ability to raise funds from public markets," he explained.

Memani emphasized that companies understand future growth imperatives. "There's a realization that if growth doesn't happen going forward, the market valuation benefits currently being received won't continue," he noted, suggesting this awareness is driving investment decisions.

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While acknowledging a slowdown in the past 6-8 months, Memani attributed this to external factors rather than structural issues. "The trade-related and tariff-related issues globally are causing uncertainty. Industries need stability - if they're producing a product today, they need to know what duties will be imposed," he explained.

This uncertainty, according to Memani, makes capital expenditure decisions challenging. "Once these issues get resolved, the pace will pick up again," the president of the industry body predicted.

The CII chief identified two key bottlenecks affecting large-scale projects. "Where thousands of skilled workers are needed, they're not getting mobilized properly, causing process slowdowns," he said, highlighting the skilled manpower shortage.

Environmental clearances present another significant hurdle. "Earlier, clearances took time, but now environmental clearances alone take 12 months. Every process takes time, causing delays in capital deployment even after project announcements," Memani explained.

To address these challenges, Memani called for targeted reforms. "We need to see if we can implement some reforms, increase skilled manpower, and support MSMEs. When large projects get investment, MSMEs will also benefit if we can provide them support," he suggested.

Addressing concerns about loan disbursement patterns, Memani cautioned against using credit growth as the sole indicator of corporate health. "You can't compare everything with loan disbursement because corporates have strong balance sheets and money is coming from credit groups," he noted.

"If you gauge how corporates are performing based on credit growth alone, it won't be entirely accurate," he added, pointing to alternative funding sources available to companies.

In the retail lending space, Memani observed varied growth patterns. "Housing loans show good growth, personal loans show good growth, but some sectors are slower. The RBI has also imposed restrictions in some areas," he explained.

The CII President acknowledged some impact on urban consumption in recent months. "Growth in several areas has been affected in the last three months, and urban consumption has seen some impact," he admitted.

However, he maintained that the overall capex story remains positive, supported by strong corporate balance sheets and capital market access.

Memani's assessment suggests that while private capex faces temporary headwinds from trade uncertainties and procedural delays, the underlying fundamentals remain strong. His emphasis on corporate balance sheet strength and market access indicates confidence in the sector's ability to drive investment growth once external uncertainties are resolved.

"The balance sheet strength and capital market raising capacity are there, and some of that money is also flowing," he said reinforcing his optimistic outlook on private capital expenditure in India.