Industry Odisha Bureau, Sep 29: Private investment fell to 10.3% of GDP in FY25 despite record corporate profits. Project announcements have more than doubled, tilting towards energy and technology. Turning plans into capacity is the test.
Indian companies are reporting record profits and stronger balance sheets. Yet that strength is not fully showing up in capital spending. India’s private investment fell to 10.3% of GDP in FY25, from 10.9% in FY23. The decline came despite tax cuts, PLI schemes and higher public infrastructure spending.
The National Institute of Public Finance and Policy (NIPFP) flagged the gap. Its August 2026 policy brief analysed 1,990 private-sector projects from FY14 to FY26. Companies increasingly preferred accumulating cash to greenfield capex, the institute said.
Announcements tell another story
New private-sector project announcements more than doubled to ₹104 trillion in FY24-FY26. That compares with about ₹56 trillion in FY21-FY23. But an announcement is neither actual spending nor finished capacity. Projects must still be completed and commissioned, NIPFP cautioned.
Capital finds new destinations
Renewable energy, conventional energy and IT-enabled services took 38% of private investment in FY24-FY26. Their share was about 25% in FY21-FY23. Renewable electricity investment rose to ₹22.3 trillion from ₹9.45 trillion. IT-enabled services, including data centres, jumped almost fivefold to ₹9.36 trillion. Steel more than doubled to ₹10.83 trillion, per CMIE CapEx data cited by NIPFP.
Technology redraws the capex map
NIPFP linked part of the shift to structural changes. Rapid growth in AI and cloud computing drove data-centre investment. That lifted demand for electricity and digital infrastructure. Supply-chain diversification supported electronics and chip manufacturing. The PLI scheme, IndiaAI Mission and Semicon India Programme also helped.
Old barriers fade, new risks emerge
Traditional execution hurdles have eased sharply. Distressed projects fell to under 0.1% of outstanding projects in FY26, from 4% in FY14. Their value dropped to ₹14,000 crore from ₹3.3 trillion. Faster clearances, single-window approvals and smoother land acquisition helped, NIPFP said.
The nature of risk has changed too. Governance issues caused 20% of distressed projects in FY26, versus 60% in FY14. Market conditions and promoter interests now account for almost 72%. Geopolitical uncertainty and input-cost volatility add to those concerns.
Credit offers another signal
Non-food bank credit reached about 60% of GDP in FY26, from 51% in FY20. Incremental industrial credit hit about ₹6 trillion, the highest since FY14. Still, credit growth does not equal commissioned capacity.
PwC India’s Ranen Banerjee said investment elsewhere could accelerate as consumption confidence improves. Divakar Vijayasarathy of DVS Advisory Group called the moderation a transition lag. He said private capital was beginning to follow the government’s investment push.
The conversion tes
India now has a large announced pipeline and stronger corporate balance sheets. Capital is also flowing towards energy and technology. The unresolved question is conversion. Only commissioned projects will show whether record profits become lasting capacity.
