India’s Private Capex Cycle: Evidence of an Emerging Investment Revival

India’s Private Capex Cycle: Evidence of an Emerging Investment Revival 

Over the past several years, public capital expenditure has played a leading role in supporting investment activity and infrastructure creation in the country. However, a durable strengthening of the investment cycle requires a broad-based pickup in private sector capex that expands productive capacity across manufacturing and services. The trajectory of private investment therefore holds important implications not only for medium-term growth, but also for employment generation and the overall dynamism of the economy. 

India’s private investment cycle has been uneven over the past decades. After a strong expansion during the mid-2000s, private capex slowed after 2011 amid rising corporate leverage, stalled infrastructure projects, and banking sector stress. The subsequent period was marked by balance sheet repair in both the corporate and financial sectors. In recent years, deleveraging, improved corporate profitability, and the resolution of stressed assets have strengthened the macro-financial conditions for renewed investment, alongside a sustained public infrastructure push. 

Against this backdrop, this article examines recent trends in private investment using firm-level balance sheet data from CMIE’s Prowess database and project-level information from the CMIE Capex database to assess both realised corporate investment and emerging investment intentions. 

The analysis points to emerging signs of a revival in India’s private capex cycle. Firm-level balance sheet data indicate that realised corporate investment has strengthened over the past three fiscals, with FY25 recording the highest level of investment in the sample period. At the same time, project-level data suggest a significant increase in fresh investment announcements during FY26 so far, led primarily by manufacturing and electricity, indicating a strengthening pipeline of future capital expenditure. The rise in project completions also points to some improvement in investment execution, suggesting that a part of the previously announced investment pipeline is gradually translating into realised capital formation. Together, these trends point to the early stages of a recovery in private corporate investment after a prolonged period of moderation. 

Balance Sheet Data Points to a Gradual Capex Recovery 

An analysis of balance sheet data of non-financial private companies,1 excluding Oil and Gas and Construction & Real Estate,2 from CMIE’s Prowess database indicates that after a prolonged phase of moderation, private corporate capex has strengthened over the past three fiscals. 

Gross investment by private firms, measured as the annual addition to Gross Fixed Assets (GFA) and Capital Work in Progress (CWIP), rose to Rs 10.5 lakh crore in FY25 from Rs 9.3 lakh crore in FY24, registering a growth of 13 per cent. Between FY19 and FY25, gross investment has grown at a CAGR of 8.3 per cent. While in the post-pandemic period, between FY23 and FY25, it has grown by 9.1 per cent, suggesting a gradual rebuilding of the investment pipeline after the sharp disruption caused by the pandemic. 

Source: CII research based on CMIE Prowess Database 

Net investment, measured as the annual addition to Net Fixed Assets (NFA) and Capital Work in Progress (CWIP), has followed a similar upward trajectory. In FY25, net investment increased to Rs 7.1 lakh crore from Rs 5.4 lakh crore in FY24, reflecting a growth of 31.3 per cent. Between FY19 and FY25, net investment has grown at a CAGR of 13.1 per cent, while in the post-pandemic period the CAGR is 17.9 per cent. The faster growth in net investment relative to gross investment indicates that recent capital expenditure is translating into net additions to productive capacity rather than merely replacing depreciated assets. 

It is important to note that reporting in the Prowess database is not uniform, as not all firms report asset data every year. Consequently, changes in aggregate investment may partly reflect variation in the number of reporting firms. At the same time, restricting the analysis to a fixed set of firms could understate investment dynamics, as the same companies cannot be expected to undertake large capital expenditure every year. To assess whether the observed increase reflects genuine investment expansion rather than reporting variation, the total change in assets has been decomposed into contributions from a balanced panel of firms and new entrants. 

The analysis shows that while investment by newly reporting firms fluctuates year-on-year, the balanced panel of over 1,200 companies has sustained investment momentum. Gross investment by this set increased to Rs 8.2 lakh crore in FY25 from Rs 6.0 lakh crore in FY24. Between FY19 and FY25, gross investment by the balanced panel grew at a CAGR of 6.2 per cent, while in the post-pandemic period, it has grown by 15.4 per cent. 

For FY25, asset data has been reported by around 2,600 companies so far, compared with approximately 4,700 companies in the previous two years. As additional firms report their data, the aggregate investment figure for FY25 is likely to undergo upward revision. 

One notable feature in Figure 1 is the sharp spike in FY21, a year severely affected by the COVID-19 pandemic. This increase appears unusual relative to the broader trend and is largely driven by firms newly reporting in the gross investment series. Sector-specific developments during the pandemic may also have contributed to higher asset additions. Some sectors, such as digital infrastructure and pharmaceuticals, undertook rapid capacity expansion in response to pandemic-related demand shifts. Firms also incurred capital expenditure to adapt to operational changes, including health and safety protocols, workplace reconfiguration, and supply chain adjustments. Lockdown-related disruptions may have further delayed the disposal or rationalisation of assets, temporarily raising reported asset stocks. 

FY21 also records the widest gap between gross and net investment, reflecting unusually high depreciation and impairment during the pandemic year. Widespread capacity under-utilisation, financial stress in several sectors, and reassessment of asset values likely led to higher write-offs and provisioning. The spike in FY21 was followed by a decline in asset additions in FY22, suggesting that the increase partly reflected temporary factors rather than a sustained expansion in investment activity.  

In the post-pandemic period, investment trends appear to have normalised. Since FY23, both gross and net investment have followed a more consistent upward trajectory, with FY25 marking the strongest year in the sample period. 

Manufacturing and Services Drive Corporate Asset Creation 

An examination of the sectoral distribution of investment reveals notable differences in the contribution of manufacturing, services, and electricity & gas to corporate asset creation over time. While the aggregate trend in investment has been discussed earlier, the sectoral breakdown helps identify the sectors driving corporate capital formation. 

Source: CII research based on CMIE Prowess Database 

Manufacturing remains the dominant contributor to corporate investment over the period. Gross investment in the sector increased from Rs 3.7 lakh crore in FY19 to Rs 5.4 lakh crore in FY25, reflecting a CAGR of about 6.3 per cent, and accounting for just over half of total corporate investment by the end of the period. The sharp movements in manufacturing investment during FY21 and FY22 largely reflect pandemic-related disruptions rather than underlying shifts in investment trends. Investment rose to Rs 6.2 lakh crore in FY21 before contracting by Rs 1.2 lakh crore in FY22. This most likely reflect accounting adjustments associated with CWIP capitalisation, asset disposals, and pandemic-related write-offs. In the post-pandemic period, investment has recovered steadily, increasing from Rs 5.0 lakh crore in FY23 to Rs 5.4 lakh crore in FY25, reaffirming the sector’s central role in driving corporate capacity expansion. 

The services sector shows a relatively stable and steadily rising pattern of investment. Gross investment increased from Rs 2.6 lakh crore in FY19 to Rs 4.3 lakh crore in FY25, reflecting a CAGR of about 8.4 per cent over FY19–FY25. In the post-pandemic period, investment rose from Rs 3.3 lakh crore in FY23 to Rs 4.3 lakh crore in FY25, corresponding to a CAGR of about 14.0 per cent. This steady expansion reflects sustained capacity creation in areas such as information technology, telecommunications, logistics, and other business services, providing a stabilising contribution to overall corporate investment. 

Investment in the electricity and gas sector has grown steadily, increasing from Rs 0.2 lakh crore in FY19 to Rs 0.7 lakh crore in FY25, implying a CAGR of about 30.1 per cent. The pace has continued in the post pandemic period with CAGR of 22.6 per cent. This reflects continued capital formation in power generation, transmission, and distribution infrastructure. Sustained investment in this sector is critical for the broader economy, as reliable energy supply underpins industrial production, supports the expansion of modern services, and enables overall economic growth. 

A similar sectoral pattern is observed in the case of net investment. Manufacturing continues to account for the largest share, with net investment rising from Rs 1.9 lakh crore in FY19 to Rs 3.5 lakh crore in FY25, representing around half of total net investment in the latter year. The services sector also records a steady increase in net investment, rising from Rs 1.5 lakh crore in FY19 to Rs 2.9 lakh crore in FY25, indicating continued asset accumulation in service-oriented activities.  

Overall, the sectoral distribution of investment indicates that manufacturing continues to account for the largest share of private corporate capex, while services investment has expanded steadily over the period. This pattern reflects ongoing industrial capacity expansion alongside sustained growth in modern service sectors. 

Project Announcements Signal Rising Investment Intentions 

The preceding analysis was based on company balance sheet data, which provide a useful assessment of realised investment, but the data becomes available only after the close of the financial year. To assess more recent investment dynamics, data from CMIE’s Capex database is examined, which captures fresh investment announcements as covered in media and other platforms. This data provides an early indication of the future pipeline of capital expenditure. 

Source: CII research based on CMIE Capex Database 

During the first three quarters of FY26, total project announcements amounted to Rs 31.5 lakh crore, compared with Rs 24.7 lakh crore in the corresponding period of FY25, representing an increase of about 28 per cent.3  

The increase in new investment announcements has been driven primarily by the private sector. Each of the first three quarters of FY26 recorded higher private investment announcements compared with the corresponding quarter of the previous year. Private project announcements during April–December 2025 stood at Rs 26.3 lakh crore, up from Rs 16.9 lakh crore in the same period a year earlier, reflecting a growth of about 55 per cent. Consequently, the share of the private sector in total project announcements rose to about 83 per cent during April–December FY26, compared with around 69 per cent in the corresponding period of FY25, indicating a marked strengthening of private sector participation in the investment pipeline.Top of Form 

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Manufacturing and Power Lead the Investment Pipeline 

The sectoral composition of new private investment announcements suggests that the increase in FY26 so far has been driven primarily by manufacturing and electricity, pointing to a renewed emphasis on industrial capacity expansion and energy infrastructure.  

During April–December 2025, manufacturing accounted for the largest share of private announcements at around 53 per cent, with project announcements rising to Rs 14.0 lakh crore from Rs 8.9 lakh crore in April–December 2024, representing a growth of about 57 per cent. 

Source: CII research based on CMIE Capex Database 

Investment announcements in the electricity sector also increased significantly, rising from Rs 4.8 lakh crore to Rs 6.9 lakh crore over the same period, an increase of about 44 per cent. The sector accounted for around 26 per cent of total private investment announcements during April–December 2025, reflecting ongoing investment in power generation and related infrastructure to support rising industrial and economic activity.  

The non-financial services sector witnessed an even sharper increase, with project announcements rising from Rs 1.5 lakh crore in the previous year to Rs 4.4 lakh crore in the current year, implying a growth of nearly 193 per cent. As a result, the share of services in total private investment announcements increased to around 17 per cent, indicating a recovery in investment activity in service-oriented sectors. 

In contrast, investment announcements in construction & real estate declined from Rs 1.6 lakh crore in April–December 2024 to about Rs 1.0 lakh crore in the corresponding period of 2025, representing a contraction of around 38 per cent. 

Overall, the sectoral pattern suggests that the pickup in private investment announcements during FY26 so far has been driven primarily by manufacturing and electricity projects, alongside a recovery in services sector investment. 

Project Completions Indicate Improving Investment Execution 

Data on completed private projects also indicate an improvement in project execution during FY26 so far. During April to December 2025, the total value of completed private projects stood at Rs 2.5 lakh crore, higher than Rs 1.7 lakh crore recorded in the corresponding period of the previous year, reflecting an increase of about 47 per cent. This suggests that a part of the previously announced investment pipeline is gradually translating into realised capital formation.  

Source: CII research based on CMIE Capex Database 

The sectoral composition of completed projects indicates that manufacturing and services accounted for the largest shares. Completed manufacturing projects amounted to Rs 0.8 lakh crore during April to December 2025, compared with Rs 0.6 lakh crore in the same period of the previous year, accounting for around 32 per cent of total completions. Completions in non-financial services also increased significantly to Rs 0.8 lakh crore from Rs 0.3 lakh crore a year earlier, raising the sector’s share to about 32 per cent of total completed projects, indicating a strengthening pace of implementation in service-sector projects. 

Conclusion: Private Investment Cycle Showing Early Signs of Revival 

Taken together, the evidence suggests that private investment activity in India has begun to strengthen after a prolonged period of weakness. While realised investment based on balance sheet data has shown a gradual improvement in recent years, more recent indicators from the CMIE Capex database point to a stronger pickup in fresh investment intentions during FY26 so far, led primarily by manufacturing and electricity. The increase in project completions also indicates some improvement in the pace at which previously announced projects are translating into realised capital formation. 

The recent pickup in private investment has important implications for India’s medium-term growth trajectory. A strengthening private capex cycle will complement the ongoing public infrastructure push, expand productive capacity across sectors, and support large-scale employment generation. At the same time, translating rising investment intentions into sustained capital formation will depend on stable demand conditions, macroeconomic and financial stability, and timely project execution. The pace at which the current pipeline of announced projects moves through the implementation cycle will therefore be critical in determining the durability of the investment recovery and its contribution to future growth. 

Note: This article was first published in the March 2026 issue of CII ARTHA (Issue 10)