January 2024 marked a record-breaking spree of state-sponsored investment summits across India, leading to an unprecedented surge in new investment proposals. During this vibrant month, investment fairs held in Tamil Nadu, Gujarat, Odisha, and Goa, along with the World Economic Forum meet in Davos, Switzerland, collectively catalysed the announcement of investment proposals worth a staggering ₹8.2 lakh crore across 241 projects.

Historically, the Centre for Monitoring Indian Economy (CMIE)'s capex service has tracked quarterly investment proposals, with figures reaching up to ₹2.5 lakh crore and ₹3 lakh crore in the quarters ending September and December 2023, respectively. Hence, the January figure is not only a substantial leap from these past quarters but also dwarfs the monthly investment average of less than ₹1 lakh crore. Even at its peak in the quarter ended March 2023, where new investment proposals hit ₹14.5 lakh crore, the monthly average was only ₹4.8 lakh crore, making January's achievements particularly notable.

The Government of Maharashtra alone signed memorandums of understanding (MoUs) worth ₹3.16 lakh crore, with a significant portion, ₹2.76 lakh crore, earmarked for green hydrogen projects across seven companies. NTPC Green Energy's commitment to invest ₹80,000 crore in green hydrogen and its derivatives to create a capacity of 1 million tonnes per annum stands out as the largest proposal.

The investment fairs have become a key platform for state governments to attract investment, as evidenced by the Vibrant Gujarat Global Summit, which claimed to have attracted investment proposals worth ₹26.3 lakh crore. Following closely were the Tamil Nadu Global Investors Meet with ₹6.64 lakh crore in proposals, Enterprise Odisha 2024 with ₹23,390 crore, and the Invest Goa Summit with ₹1,500 crore worth of commitments.

However, the ability to translate these grand declarations into specific, actionable investment projects remains a challenge. For instance, the Vibrant Gujarat Global Summit announced MoUs for 41,299 projects but provided specific details for only 17 projects totaling ₹2.4 lakh crore in investments. Similarly, while the Tamil Nadu Global Investors Meet announced 631 MoUs, CMIE's CapEx database could identify 43 projects with clear information worth ₹1.4 lakh crore.

The World Economic Forum in Davos also played a significant role, with 27 proposals involving investments of ₹1.4 lakh crore identified by the CMIE’s CapEx team. This international event showcased investment opportunities in states like Karnataka, Maharashtra, Tamil Nadu, Telangana, and Uttar Pradesh, highlighting India's growing appeal as a global investment destination.

In total, the investment fairs in January 2024 resulted in ₹5.4 lakh crore worth of proposals, with projects worth ₹4.5 lakh crore representing new announcements.

Interestingly, Amish Shah, analyst at BoFA Securities, mentions in a 2023 report that contrary to common perception, low industrial (less than 2% of total capex) utilisation, was no longer the key driver of private capex. As per the RBI's 62nd round of quarterly Order Books, Inventories and Capacity Utilisation Survey, covering 707 manufacturing companies, conducted during Q2 of FY24, capacity utilisation in the manufacturing sector declined to 73.6% in Q1 from 76.3% in the previous quarter. However, Shah states in the report that the opening-up of infrastructure monopolies by the government was the key driver. As per the brokerage firm’s analysis of past five instances of the government opening infrastructure monopolies, private capex accelerates four years (gestation period) after opening-up of monopolies. Secondly, these sectors witness rapid capex led by private and foreign capital: generally, a 3x capacity addition over 10-15 years against a cumulative over 50 years seen during a monopoly.

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