ASSOCHAM

Investment

Meter

“Karnataka Emerged as Preferred Destination for India Inc,

Gujarat Slips to Fourth Place in April-September 2010”

December 2010

Prepared by:

Ravish Jaggi

ASSOCHAM Research Bureau

India Inc. Capex add up to Rs. 2,126,008 crore in April-September 2010:

ASSOCHAM

India is set to become a potential goldmine on the back of investment announcements

in the 20 major states that surged during April-September (H1) 2010 to Rs. 2,126,008

crore. The total outflow of the capex add up is 26.7 per cent higher as compared to the

corresponding period of the previous year (2009-10), according to the analysis of

ASSOCHAM study on the corporate investment pattern.

As per the Assocham Investment Meter (AIM) assessment report for corporate

investments across states and sectors, total live investment plans of India Inc. increased

significantly from Rs. 7,971,464 crore in 2009 to Rs. 10,097,472 crore during the period of

April-September, 2010. Among the 20 major states Karnataka, Uttar Pradesh and

Jharkhand carved as the preferred destination for the India Inc. during the H1 of 2010-

11.

“The total investment intentions tracked in the AIM study reflects encouraging signs of

pick up in investments and acceleration in the overall growth rate. The factors such as

delay in infrastructure expansion plans, hurdles in legal procedures and political

instability have adversely affected the implementation of these investment projects

across the states”, said Mr. D.S. Rawat, Secretary General, ASSOCHAM.

In this context the Secretary General of Assocham, urged the central and state

governments to take these issues on priority basis in order to realize the social and

economic benefits of the investments through timely implementation of the line up

projects.

Among the top investment attracting states, Karnataka emerged as the top registering

states with the highest share of 9.1 per cent in domestic investment plans during the

period of April-September, 2010. The state witnessed Rs. 388,578 crore worth of capex

plans which are 73.8 per cent higher as compared to the total investment realized in the

state during the past year. Also, the state attracted majority of investment plans in the

manufacturing, services and power sectors.

Similarly, Uttar Pradesh stood at second position registering growth of 75.5 per cent (Y-

o-Y) and 4.7 per cent share of the total investments made during April-September 2010-

11. The state attracted whopping investments plans of Rs. 205,189 crore during the said

period. The Power and Services were the prominent among the sectors that attracted

majority share of the investments.

The availability of rich mineral resources such as coal and iron ore along with cheap

availability of manpower helped Jharkhand to rank amongst the top three states in

attracting corporate investments.

The state was ranked third on investment radar with total planned investments stood at

Rs. 200,141 crore during having a share of 6.3 per cent in the total investments made in

H1 of FY’11. The state recorded a hike of about 45.9 per cent in overall investments over

the previous year. Among the sectors Manufacturing and Power companies have

received the major proportion of the investments.

Gujarat and Orissa stood at fourth and fifth position by attracting investment plans

worth Rs. 196,305 crore and Rs. 191,382 crore respectively during in H1 of 2010.

One time preferred destination for India Inc. the state, Gujarat slips to fourth place. The

overall investment contribution in the state during the April-September of FY’11 stood

at 13.2 per cent. However, the state has seen merely increase of 17.3 per cent in the

investments over the same period of the previous fiscal. The Power, accounted as the

prominent sector among the other investment attracting sectors in the state were

manufacturing, real estate and textiles.

On the other hand, Orissa which carved the fifth place and attracted an investment

proposals of Rs. 191,382 crore. In the current fiscal, during the same period the state’s

share to total investment was 11.2 per cent, with top sectors being power,

manufacturing and mining.

In terms of sectoral analysis, the Assocham Study shows that with increasing energy

requirements of the rapidly growing Indian economy, for the investors Power sector

figures out as a nest egg to invest in. The sector witnessed bulk of the investments of

worth Rs. 3,643,883 crore with a share of 35.4 per cent in the overall investments plans

across the country during April-September of current fiscal.

During the period Manufacturing sector have also been favored by the industrialists for

investment. The sector registered a growth of 26.3 per cent while attracting the total

investments of Rs. 2,704,211 crore.

Followed by the Manufacturing sector, Services sector emerged as the third priority

sector which attracted proposed investments of Rs. 2,162,950 crore, contributing 21.0

per cent in overall investments made in the period of FY’11.

Other sectors which recorded high flowing corporate investments during April-

September of 2010-11 were; Real Estate attracted Rs. 1,172,823 crore (11.4 per cent),

Mining Rs. 308,716 crore (3.0 per cent) and Irrigation Rs. 301,350 crore (2.9 per cent).

Annexure:

Top Five States

(in Rs. Crore)

Rank STATES Upto

April- Sep 2009-10

Upto April- Sep

2010-11

Investments in April-

Sep 2010-11

YonY % change

% share in Total

1 Karnataka 526482 915060 388578 73.8 9.1

2 Uttar Pradesh 271613 476802 205189 75.5 4.7

3 Jharkhand 435888 636029 200141 45.9 6.3

4 Gujarat 1134438 1330743 196305 17.3 13.2

5 Orissa 943334 1134716 191382 20.3 11.2

Source: Assocham Investment Meter (AIM) and CMIE.

Sectoral Investments (upto April-Sep 2010-11) (in Rs. Crore)

S. No. Sectors Capex % share in Total

1. Power 3643883 35.4

2. Manufacturing 2704211 26.3

3. Services 2162950 21.0

4. Real Estate 1172823 11.4

5. Mining 308716 3.0

6. Irrigation 301352 2.9

Source: Assocham Investment Meter (AIM) and CMIE.