India Capital Expenditure Survey

Executive Overview

A company incurs capital expenditure (CapEx) to acquire or upgrade physical assets, including property, plant, and equipment. In this periodic report, ARC Advisory Group looks at several different manufacturing industries to identify the current CapEx trends in India. We calculate CapEx in two separate segments: based on the money spent on acquiring and upgrading total fixed assets, and on the money spent on acquiring and upgrading the plant and machinery.

While ARC also publishes a separate global Capital Expenditures report for leading industries in all world regions, this report focuses exclusively on India’s capital expenditure analysis and includes the CapEx trends for leading industries in the country. These include automotive, cement, chemical & petrochemical, electric power, metals, oil & gas and refining, food & beverage, and pharmaceutical.

Industrial companies are seizing the present growth opportunities that India offers. Companies are building best-in-class industrial facilities to meet the growing needs of the country’s expanding consumer class. Major in-vestments have been planned for infrastructure development and should help push domestic steel companies to increase production. The plan to expand and upgrade refineries to meet India’s Bharat Stage (BS) emissions standards for vehicle fuels has also been implemented.

The Government of India implemented the BS VI transportation fuel mandate on April 1, 2020. Despite many challenges, India successfully managed the timely implementation of BS VI. This new emission standard required significant changes in hardware, like improvements in engine combustion and calibration along with the introduction of after-treatment devices, all of which required heavy investments. However, with the collaborative and focused approach across the value chain, India ensured a smooth transition.

While a few sectors are currently burdened with overcapacity and underutilization of assets, eventually, the rise in domestic demand should increase value creation through these assets. On the infrastructure front, the government has allocated huge investments for building roads, railways, airports, and ports; and companies are likely to ramp up their capacity expansion activities to meet domestic demand in the coming years. According to ARC Advisory Group’s India CapEx Survey, capital spending as a percentage of revenue has improved compared to the previous year.

Table of Contents

• Executive Overview
• An Overview of India’s Economy
• Major Factors Influencing India’s Economy and CapEx
• Automotive
• Cement
• Chemical and Petrochemical
• Electric Power
• Metals
• Oil & Gas and Refining
• Pharmaceutical
• Food & Beverage
• Recommendations

ARC Advisory Group clients can view the complete report at the ARC Client Portal.

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