Investments By Indian Firms
Indian companies have announced investments exceeding ₹32 lakh crore during the first nine months (April-December) of FY24, marking a 39% rise compared to ₹23 lakh crore during the same period last year, as per a State Bank of India (SBI) report.
The report highlights a robust pipeline of ₹13.63 lakh crore in work-in-progress capital, indicating sustained growth in the coming years. Government investment as a share of GDP reached 4.1% in FY23, the highest since FY12, while private sector investment rose to 11.9%, the highest since FY16. Preliminary FY24 data, expected by February-end, suggests private investment may reach 12.5% of GDP.
Indian companies continue to rely on external commercial borrowings (ECBs) for funding, with outstanding ECBs totaling $190.4 billion as of September 2024, a slight increase from previous quarters. Of these, $155 billion comes from non-rupee and non-FDI components, providing stability through lower volatility due to hedging practices.
Private firms hold 63% of these borrowings ($97.58 billion), while public sector companies account for the remaining 37% ($55.5 billion). Notably, private firms have stronger hedging practices, covering 74% of their exposure, contributing to an overall hedging ratio of 68% for non-rupee-non-FDI ECBs.
The report reveals an increasing trend in hedging, with two-thirds of total ECBs being hedged as of September 2024, compared to 55% two years ago. For the unhedged portion, some borrowings are backed by government guarantees, while others benefit from natural hedges where earnings are in foreign currency. As of September 2024, natural hedges accounted for 1.5% of unhedged ECBs.
This upward trajectory in investments and sound financial strategies highlights India’s strong economic growth momentum, driven by both public and private sector contributions.
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