Will India’s private sector investment exceed Rs 2.67 lakh crore in 2025-26?

Mumbai, Aug 31 (NationPress) Private corporate investment is projected to surpass Rs 2.67 lakh crore in 2025–26, rising from Rs 2.2 lakh crore in 2024–25. This growth is supported by strong macroeconomic fundamentals, healthier balance sheets, improved capacity utilization, favorable liquidity conditions, a push in infrastructure development, and a 100-basis points policy rate cut anticipated from February 2025, as reported by the RBI’s latest monthly bulletin.

Private corporate investment has consistently been a key driver of India’s long-term growth. Following a period of subdued activity during the pandemic, the investment cycle is experiencing a revival due to a combination of supportive factors.

For 2024–25, the economic landscape is characterized by robust GDP growth, ongoing disinflation, and an accommodating monetary policy, as stated in the article.

In recent years, Indian corporations have focused on rehabilitating their balance sheets through deleveraging, enhanced cash flows, and strong profitability across various sectors. The improved asset quality of the banking sector and abundant liquidity have fostered a favorable credit environment, leading to easier financing options for capacity expansion.

Recent patterns in high-frequency indicators—such as increased imports of capital goods, better capacity utilization, and heightened activity in corporate bond markets—indicate a renewed investment enthusiasm among firms.

Furthermore, targeted policies like the Production-Linked Incentive (PLI) schemes, investments in energy transition, and the expansion of digital infrastructure are motivating corporates to pursue new investments.

The domestic economy remains resilient, projecting a real GDP growth of 6.5 percent in 2024–25, establishing India as the fastest-growing major economy, driven by strong domestic demand and steady progress in public infrastructure investments.

Investment in greenfield (new) projects constituted approximately 92 percent of the total cost of projects financed by banks and financial institutions during 2024-25, reflecting a consistent trend from previous years.

Greenfield investments typically introduce new and additional resources and assets to firms, resulting in increased gross fixed capital formation (GFCF).

Thus, augmented investment in greenfield projects suggests a forthcoming capacity expansion by private corporates, according to the article.

The distribution of sanctioned projects across industries in 2024-25 reveals that the infrastructure sector commanded a significant 50.6 percent share of the total project cost, primarily driven by investments in ‘Power’, followed by ‘Road & Bridges’.

In addition to infrastructure, other significant industries such as chemicals and pesticides, construction, electrical equipment, and metal & metal products also represented substantial shares in the overall project costs.