India’s corporate capital expenditure continues to gather momentum, with listed companies investing ₹11.7 trillion in the year to September 2025. Combined with spending by the central and state governments, total capex has touched an all-time high of ₹31.6 trillion on a trailing-twelve-month basis, signalling one of the strongest investment upcycles in recent years.
Utilities, energy, Reliance Industries, metals, industrials and automobiles remain the largest contributors, each accounting for more than ₹1 trillion in annual capex. However, analysts point to an increasingly broad-based expansion. The number of listed companies with annual capex exceeding USD 100 million has risen to 169, up from 135 in FY24. Industrial firms account for the largest share, followed by autos, metals and consumption-linked sectors. Notably, even relatively less capital-intensive sectors such as autos, consumer goods and healthcare are now contributing meaningfully to the capex landscape.
A hedge against global AI-led spending
India’s capex cycle is unfolding in contrast to trends in the United States, where investment growth is increasingly driven by AI and data-centre spending. In India, old-economy sectors—including energy, manufacturing, infrastructure and defence—are powering the upcycle. Analysts say this positions the country as a hedge against a potential correction in global AI-driven capex exuberance.
The shift comes as countries worldwide pursue more inward-looking, self-reliant industrial policies, encouraging domestic capacity-building. India’s own investment rate has climbed to a cycle high of around 34% in the first half of FY26, supported by an improved incremental capital-output ratio of roughly 4, indicating stronger productivity of investment. A real estate upturn is also contributing, though affordable housing recovery remains uneven.
Strong financial foundations
High corporate profitability—now at 5.2% of GDP—has strengthened internal cash flows and reduced leverage to multi-year lows, creating room for fresh borrowing. Low non-performing assets and subdued credit growth have made debt financing increasingly accessible, while buoyant equity markets continue to support capital raising.
Economists note that further RBI rate cuts and moderating inflation could help reduce real interest rates, providing an additional boost to the capex cycle in the months ahead.
