Renewable Energy Leads In Investor Interest In UP Global Investor Summit

After the announcement by Reliance CMD Mukesh Ambani about investing Rs 75,000 crores in UP over the next 4 years, the summit has ended with renewable energy garnering possibly the highest commitments by value.

State Investor summits usually measure their success by the value of MoUs signed, or in this case LOIs or Letter of Intents.  These commitments, even as they have minimal legal value, do provide for attractive headlines and a signal of intent. In that context, the UP Global Investor’s Summit saw 19,000 MoUs/LoIs signed with almost Rs 35.5 lakh crores pledged for investment in the state. Delhi NCR’s Gautam Buddha Nagar (Noida) got 27% of commitments, followed by Agra, Lucknow & Gorakhpur.

While Reliance has included investments in renewable energy as a key part of its commitments, the renewable energy sector as a whole attracted  commitments for an estimated Rs 4.4 lakh crore through 144 LOIs, accounting for almost 15% of total investments. In second place was the electronics manufacturing sector with 151 LOIs worth an estimated Rs 3.5 lakh crore. Readers may not be aware but UP is already the largest producer of mobile phone handsets in the country.

The rush into renewable energy LOIs should not surprise, considering the vast potential that exists in the state. UP has been a laggard on renewable energy additions until now, especially on solar, even as wind potential in the land locked state is minimal. The state does host a few module manufacturing units, but has been losing out on fresh capacity additions to Gujarat, and more recently, Rajasthan like almost every other state actually.

Potential does exist for manufacture of class II components in the state however, and even a 20% conversion on the LOIs signed will be a huge achievement. For the record, state investor summits in India have seen conversion rates of as low as 3-5% previously for other states. The interest in eight of the ‘aspirational’ or backward districts of the state, with MoUs for close to Rs 1.6 lakh crores, is also encouraging, and one hopes to see details of these intent to invest soon. With a population of close to 240 million across its 75 districts, India can never really move into a high growth path without carrying UP along, and recent news on that front from the state has been encouraging.