India's Corporate Capex Has 'Strong Runway' For Growth Amid Policy Easing: Goldman Sachs Analyst

At a time when the government and the Reserve Bank of India are working in tandem to ease policy restrictions and stress on the economy, India's corporate capex has a strong runway for growth, according to Goldman Sachs' Chief Asia Credit Strategist, Kenneth Ho.

Ho pointed out that India needs a multi-channel approach in order to drive more corporate credit and some of that is already taking place. "A big driver of that will be the corporate sector," he told NDTV Profit. "An important path going forward is funding corporate capex in the Indian economy."

"Our view is that there’s going to be multi-channel approach that would incorporate bank lending, bond markets and NBFCs. One important component will be external borrowing," he added.

Ho believes some of the recent decisions, including the relaxation of banking capital, should help the banking sector. When asked about the animal spirit Indian markets require in order to boost corporate capex growth, Ho pointed towards potential easing of the tariff scenario.

"Credit demand has been a little bit slow from the corporate sector. We think it will come through should the Indian economy get some stability, especially with respect to the tariff situation," he said.

The Goldman Sachs analyst went on to talk about how the underlying structure in the banking system is robust and, therefore, asset quality might not necessarily be hindered, even if lenders push for more capex.

"If you look at asset quality, we do think currently we are in a very strong position. If you look at the broader vulnerabilities that investors have associated with India, many of those have improved quite significantly," he pointed out. "Inflation has come down noticeably as well. This gives pretty strong platform for credit growth going forward," he added.