In a recent survey conducted by the Ministry of Statistics, it was revealed that private sector capital expenditure (capex) in India for the financial year 2026 is likely to experience a 25% decline, with a total of ₹4.88 lakh crore expected to be invested. This is compared to ₹6.56 lakh crore invested in the previous fiscal year, indicating a slowdown in planned capital investment. The survey, which was conducted between November 2024 and January 2025, involved 3,064 enterprises, of which 2,172 responded with their investment intentions.

Survey Findings: Investment Intentions

The survey uncovered that 43% of the surveyed enterprises did not report any planned capital expenditure for FY26, indicating no significant investment intentions from these companies. This reflects broader caution in sectors like mining, quarrying, electricity, gas, and wholesale trade, where capital expenditure is either stagnant or nonexistent. In contrast, 32% of businesses reported plans to increase their capex investments in FY26, suggesting growth potential in select industries.

Sectors Driving Capex Growth

Notably, the manufacturing, healthcare, and education sectors are set to see a substantial increase in capex, with growth projections exceeding 50% for these industries. The manufacturing sector, in particular, is poised to benefit from rising demand and the ongoing push for domestic production. In contrast, mining and retail trade show a more subdued outlook, with zero planned investments in FY26.

Long-Term Growth Momentum Despite Short-Term Decline

Although the capex for FY26 is set to decline, it’s important to note the long-term growth trajectory observed in India’s private sector. The total capital expenditure since FY21 has risen by 24%, which reflects a positive growth trend despite the current fiscal slowdown. This indicates that businesses, while cautious in the short-term, are investing for future growth.

Impact of Government Policies

The current government’s economic policies and tax incentives may play a role in shaping investment strategies for FY26. Several businesses have also adopted a conservative stance in projecting their investment plans for the coming year. Government efforts to revitalize domestic industries and encourage manufacturing might lead to a positive shift in business sentiment in the long term.

Conclusion: A Mixed Outlook for FY26

While the decline in capex is a significant concern, especially for sectors that are underperforming, the increase in investment in select industries offers a promising outlook for India’s future economic performance. The manufacturing, healthcare, and education sectors are expected to drive economic growth with their increased capital expenditures. However, the mining and retail sectors may face challenges as economic conditions evolve.

Despite these challenges, the growth momentum from FY21 onwards signifies that India’s private sector is focused on long-term economic sustainability. These investment trends point to a strategic shift in the country's private sector policies, balancing caution with a future-oriented growth vision.

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