This fall has occurred after the Indian industry consistently showed higher investments in the last four years. With the demand slowdown catching up major segments and return on existing investments becoming a major drag, fresh investments committed in new projects fell to Rs 2,01,742 crore from Rs 2,32,346 crore in the same period of last year. A study by the Centre for Monitoring Indian Economy (CMIE) has revealed that the fall has been greater in synthetic textiles, electricity, aluminium, automobile ancillaries, ferrous and non-ferrous metals. Had it not beenthe jump in investments in the services sector, the figure would have fallen further.

What is worrying experts is that fresh investments are showing further signs of decline. ``This does not augur well for a developing country like India which needs higher growth rate. We need massive investments in many sectors,'' said a fund manager. The manufacturing sector in general showed 41.92 per cent fall in new investments to Rs 46,239 crore. As per CMIE, even a vital infrastruture sector like electricity showed a 48.50 per cent dip in investments to Rs 33,859 crore.

Significantly, the number of projects shelved by various companies for various reasons has been rising of late. In cotton textiles, five big projects were shelved by companies last year. Indo Rama Sythetics shelved its Rs 350 crore cloth and denim project considering the overall economic slowdown and funds constraint. Chemplast Sanmar dropped its Rs 300 crore cotton yarn project due to the South-east Asian crisis. Arvind Mills also shelved its Rs200 crore bed and bathroom fabric project.

The problems in the cement industry led to a 20 per cent decline in investment in the sector. Larsen & Toubro which commissioned its Rs 590 crore Anantapur project put on hold its Rs 600 crore expansion plan to double the capacity of plant following overcapacity in the region. Moreover six cement projects with investments of Rs 2,296 crore were shelved during the one-year period ended April 1999.

In the controversial steel sector -- which hit the headlines for fund diversion and loan reschedulements -- as many as 16 projects worth Rs 16,040 crore projects have stalled. Total investments in non-ferrous metals industry also declined by 15 per cent. Metdist Industries shelved its Rs 1902 crore copper project at Pipavav in Gujarat due to the slump in economic conditions. Moreover, investments in automobile sector declined sharply by 46 per cent. While many automobile projects were taken up in 1998, the slump in demand for vehicles has forced many multinationals toreview their investments. These include Fiat's Ranjangaon project and Skoda's Aurangabad project.