The number of private sector projects in Tamil Nadu financed by banks and financial institutions increased to 44 in 2022-23 from 40 in 2021-22, according to data shared by a recent RBI bulletin.
However, the State’s share in overall project cost of ₹2,66,547 crore dipped to 4.8% in 2022-23, from a share of 8.8% in the total project cost of ₹1,41,976 crore in 2021-22, it said.
The study titled Private Corporate Investment: Performance and Near-term Outlook tracked projects financed by banks and financial institutions as one of the aspects. It said overall about 547 private projects got assistance from banks and financial institutions during 2022-23 with a record high total project cost, when compared to 401 projects in 2021-22.
The envisaged total cost of the projects financed by banks/financial institutions reached a new peak during 2022-23 since 2014-15, it said.
The study focused on projects whose cost exceeded ₹10 crore.
In 2021-22, Tamil Nadu’s share in the overall project cost sanctioned by banks and financial institutions increased to 8.8% from just 0.7% in 2020-21 (which was impacted by Covid-19 pandemic).
The location of projects depends upon a range of factors, including the accessibility to raw materials, the nature of the project, the availability of skilled labour, the presence of adequate infrastructure, the size of the market, the growth potential, the availability of suppliers, and the demand for the products, the study said.
The state-wise distribution revealed that the top five states Uttar Pradesh, Gujarat, Odisha, Maharashtra and Karnataka, together account for 57.2 per cent share in total project cost during 2022-23, higher than 43.2 per cent share during 2021-22, it said.
In 2022-23, Uttar Pradesh accounted for the highest share 16.2% in the total cost of projects sanctioned by banks and financial institutions followed by Gujarat, Odisha, Maharashtra and Karnataka, the study said.
The share of Uttar Pradesh and Odisha in the total cost of projects improved significantly from the previous year as well as the average share recorded during the period 2013-14 to 2020-21, it noted.
The recent resurgence in private projects investments is concentrated in specialised sectors such as Green energy, Semiconductors, Lithium-ion Batteries, and Hydel & Solar power and the competition among the states has intensified to bag new projects especially those with high-tag investments, Shashikant Hegde, director and CEO of Projects Today, an investment monitoring firm said.
This competition is heating up among the industrialised states like Maharashtra, Tamil Nadu, Gujarat, and Karnataka with emerging states like Uttar Pradesh, Telangana, and Andhra Pradesh too trying their level best to attract investors, he added.
In this race, the states that offer the most favourable terms and conditions and act swiftly would emerge as the victors, Mr. Hegde pointed out.
Tamil Nadu Chief Minister M K Stalin recently said the State has attracted a total of 241 investment proposals in the manufacturing sector to the tune of ₹2.97 lakh crore in the past two years.
Tamil Nadu’s recent accomplishments in attracting major projects from entities like Godrej Consumer Products, Foxconn, Greenko Energies, Volthill, etc., indicates the state’s proactive efforts to establish itself as a top-choice investment destination for the private sector, Mr. Hegde said.
Overall, the investment cycle appears to be poised to gain momentum going ahead, but, its sustainability needs to be watched closely due to factors like higher cost of capital owing to tightening of monetary policy by various central banks including India, global uncertainty led by geo-political tensions, and risk of slowdown in major advanced economies which could hamper investments, the study pointed out.
