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Informist, Thursday, Aug. 28, 2025

 

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--RBI paper: Uncertain demand points to cautiously optimistic pvt invest FY26 
--RBI paper: High cash buffer points to cautiously optimistic pvt invest FY26 
--RBI paper: Pvt capex expected to rise to INR 2.67 tln in FY26 
--RBI paper: Geopolitical tensions, lower demand may impact invest sentiment

 

MUMBAI –  Capital expenditure by Indian corportaes may rise to INR 2.67 trillion in 2025-26 (Apr-Mar), from INR 2.20 trillion in the previous financial year, according to a paper by the Reserve Bank of India's staff, published Thursday. "The phasing profile of pipeline projects financed through all the three channels suggests that the envisaged capex could increase substantially to 2,67,432 crore (INR 2.67 trillion) in 2025-26 from 2,20,132 crore (INR 2.20 trillion) in 2024-25," the paper said. 

 

The three channels mention in the paper include private corporates' capital expenditure projects sanctioned by banks and financial institutions, capex-related external commercial borrowings, including foreign currency, convertible bonds, and rupee-denominated bonds. The channels also include funds raised through initial public offerings, follow-on public offerings, and rights issues for capital expenditure purpose.

 

 

"Based on pipeline projects, financed through all channels, capital expenditure is expected to rise to 2.67 lakh crore (INR 2.67 trillion) in 2025–26, aided by robust macroeconomic fundamentals, improved balance sheets, rising capacity utilisation, easy liquidity conditions, infrastructure push, and a 100-bps policy rate cut starting from February 2025," the paper said. 

 

However, the outlook for private investment activity remains cautiously optimistic, reflected in lower investment announcements amid uncertain demand conditions along with higher cash buffers with Indian companies, the paper said. "While external risks such as geopolitical tensions, global uncertainty and demand slowdown may influence investment sentiment, the domestic fundamentals appear robust," it said. 

 

In FY25, Investment in green field projects accounted for the lion share of about 92% in the total cost of projects financed during 2024-25, the paper said. "Higher investment in green field projects thus points to likely capacity expansion by private corporates going forward," it said. 

 

Industry-wise distribution of projects sanctioned during FY25 indicates that the infrastructure sector accounted for 50.6% share in the total cost of projects, primarily driven by investment in power, followed by roads and bridges. However, the share of infrastructure related projects in the total cost of projects was lowest in the last 10 years, the paper said. Beside infrastructure, among other major industries, chemicals and pesticides, construction, electrical equipment, and metal and metal products also accounted for the sizeable share in the total cost of projects. 

 

Overall, based on the various channels of fundings, total capital investment of INR 4.15 trillion was intended to be made by the private corporate sector in FY25, broadly similar to the planned capex during the previous year. "The ability of firms to convert intentions into execution will be critical in shaping the next phase of India's growth. Thus, sustained monitoring of project implementation and supportive policy measures will be vital to translating this momentum into durable economic gains," the paper said. The article, part of the RBI's monthly bulletin, does not represent the views of the central bank.  End

 

Reported by Kabir Sharma

Edited by Akul Nishant Akhoury

 

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