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MUMBAI : There is abundant liquidity, both globally and locally, and while the tapering by the US Federal Reserve could be a near-term factor for the markets, it has been well-telegraphed and is only an obvious outcome of the recovery. In an interview Sanjay Singh, who has just been appointed chief executive officer (CEO), BNP Paribas India, outlines the key factors driving business activity amid the looming threat of covid-19. Edited excerpts.

As the new CEO of the bank what will be your top priority in the near future?

In India, we are committed to financing economic development with a positive impact on our clients and the society. For example, energy transition is a priority for the government and it resonates with our group’s commitment to facilitate low carbon economic development. Our unique strength is our global network across 68 countries and we aspire to be the bank of choice for large Indian corporates and subsidiaries of multinational corporations (MNCs), especially European, coming into India. Another core area is digitization, which has become a necessity in the post-covid world. Our digital strategy is built on three pillars—big data, blockchain and artificial intelligence. We are taking the lead to embed digital transformation at the heart of BNP Paribas Corporate and Institutional Banking’s strategy. We are assisting Indian pharma firms across the globe by putting to work our extensive network especially in Europe, the Middle East, Africa and the Americas. On the renewables front, we are helping both European and Indian corporates connect with environmental, social, and governance focused investors and technology players.

We are probably in the beginning of a massive capex cycle. How are you viewing this opportunity ?

Capex revival has been the key question surrounding the Indian growth story. India’s last capex cycle ended around 2010-11. Since then, India has gone through a start-stop-start phase until the pandemic in 2020. The nationwide stringent lockdowns in 2020 marked the bottom of the capex cycle, followed by a steady recovery barring a couple of hiccups in April and May in 2021. Capex announcements across old economy sectors such as coal, steel, chemicals, and oil and gas total about $50 billion. Combine that with renewable investments and investments by micro, small, and medium enterprises and small and medium enterprises, and the capex cycle this time around seems sustainable. The production-linked incentive scheme for 13 sectors, with a potential outlay of almost 1.9 trillion, can further boost capex plans. I am very excited about the opportunity India offers over the next 3-5 years given a resilient economy, a business-friendly government and an attractive tax regime.

Are you concerned that global and local macro factors are peaking?

On the contrary, I am very positive about both the global and India macroeconomic environment. The recent US jobs report appears to be a blip in an otherwise fundamentally strong economic picture that has been building since the introduction of vaccines around the world. European data continues to pick up as evidenced by the purchasing managers’ index data. India continues to vaccinate its population at a rapid pace. As a result, manufacturing activity has picked up and unemployment has consistently fallen and is back to near pre-pandemic levels. Other high-frequency data are improving too. Corporates have recast their debt too and goods and services tax collections have swung back to above the 1 trillion mark. April-July tax collections in 2021 were at 156% of the 2019 numbers in the same period. There is abundant liquidity, both globally and locally, and while the Fed tapering could be a near-term factor for the markets, it has been well-telegraphed and is only an obvious outcome of the recovery.

What are the key reforms you foresee from regulators for Indian markets?

The Reserve Bank of India (RBI) has been working on progressively making it easier for foreign investors to access the onshore rates market. Liberalized access to the onshore interest rate swaps market, a dedicated window in the form of the Voluntary Retention Route and Fully Accessible Route for access to Indian bonds are just some of the relaxations that we have seen in the last few years. RBI is also working towards making government bonds clearable in international clearing houses and this could potentially pave the way for inclusion of IGBs (Indian government bonds) in international bond indices that can be a game changer for bonds. IFSC has been working to incentivize banks and other FIs (financial institutions) to set up shop in GIFT City. Making the rupee NDF (non-deliverable forward) accessible to Indian banks by having a presence in GIFT city was just the first step in that direction. In that regard, we expect regulators such as the Insurance Regulatory and Development Authority of India, Securities and Exchange Board of India and RBI to work closely with IFSCA (International Financial Services Centres Authority) to make available a wider suite of vanilla and structured products across different asset classes to market participants in their domain adopt GIFT city on a wider scale.

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