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The rising capital expenditure (capex) trend of Indian corporates is likely to continue and grow at 10%-12% a year during the next fiscal year to March 2024, Fitch Ratings said in a release on Tuesday.

Fitch said capex was flat over FY19 to FY21 and grew 16% in FY22. The forecasts are for the 8 state owned enterprises and 21 privately held Fitch-rated corporates in the country.

"We believe growth opportunities arising from India's supply-side policy steps in recent years, domestic corporates focusing more on localisation, and multi-nationals looking to reduce risk in global supply chains may attract higher private investment in the medium term," analysts at the rating agency wrote.

"However, progress that is slower-than-expected may present risks."

The ratings agency said government reforms such as the goods and services (GST) tax act, bankruptcy code and more recent measures such as a lower corporate tax rate, the PLI (production linked incentive) schemes and rising state spending on infrastructure may further boost investments.

Indian banks have fixed their non-performing loans and improved their credit costs in recent years and are well positioned to support the funding needs to corporates, it said.

However, currency pressures from high commodity prices and a weak global economic outlook present risks to India's investment demand as it remains a net importer of energy and exports 21% of its output, Fitch said.

"The capex outlook may also be tempered by rising interest rates amid inflationary pressures for corporates with a smaller scale and/or weak financial profile. However, the secular nature of most capex drivers should mitigate these risks over the medium term."