MC EXCLUSIVE Govt nudging private sector for capital spending to counter slowdown risks

Share of corporate capex in India’s overall capex has continued to decline consistently since FY19.

Amidst downside risks to growth, the central government has been holding meetings with industry to nudge them to undertake capital spending. In the past few days, officials from the finance ministry, and Prime Minister’s Office (PMO), have interacted with industry associations, and asked them to spend on capital creation, a senior government official told Moneycontrol.

"We are constantly talking to them, telling them to spend now, rather than waiting for the future. But, they say, there are uncertainties," the official said.

"We’ve got some positive response, regardless. Hopefully, in some sectors, we would see private capex picking up soon," the person added.

According to data from CEIC and Yes Securities, the share of corporate capex in India’s overall capex (government plus corporate) has continued to decline consistently since FY19. In FY19, the corporate sector’s share was 46 percent, which plunged to 35 percent in FY24. The data for FY25 is not available.

The statistics ministry, in April 2025, released a survey report, which showed that of the 2,172 enterprises surveyed, about 30 percent planned to a sharp in capex in FY25 as compared to FY24, but chose to remain cautious in FY26.

According to the ministry, 2,172 firms spent Rs 422,183 crore for capital creation in 'actuals' in FY24, and intended to spend Rs 656,493 crore in FY25. But in FY26, these firms, pegged their capex estimates at Rs 488,866 crore.

"The slightly lower intended capex for FY26, though still above FY24 levels, reflects cautious planning after a strong 2024–25," the ministry had said.

Having said that, L&T Chairman SN Subrahmanyan told Moneycontrol, earlier this month, that a revival in private sector investment is boosting India’s biggest construction firm’s order book, complementing the steady flow of government-led infrastructure projects that supported growth since the pandemic.

“During Covid-19, private sector investment froze. Balance sheets were stretched, sentiment was weak, and nobody wanted to commit capital. At that time, government orders kept us afloat — and I must give full credit to the Government of India for stepping up,” he said. Subrahmanyan added that the picture has now changed, with private corporations returning to the investment cycle.

According to a recent report by CareEdge, data centres and renewables are attracting fresh investments, and capacity expansions in cement and mining are being planned through 2028-30. However, oil & gas capex has remained mostly flat, despite utilisation rates topping the 100 percent mark.

There’s also renewed hope in the announcements pipeline. Private players have ramped up fresh investment intents, particularly in electricity and manufacturing, it said.