Here’s a number that should unsettle anyone betting on India’s growth story: private capital spending as a share of GDP fell from 16.8% in FY08 to around 10% in FY24.
Over the same period, India’s GDP has more than tripled. The economy grew, but the animal spirits of the private sector strangely did not keep up. For more than a decade, the government has been doing the heavy lifting of capital formation – from highways and railways to ports and digital infrastructure.
But as any economist will tell you, a growth model that depends primarily on public investment is a car running on one engine. For India to sustain 7% growth over a decade, the second engine – private investment – needs to come alive.
The good news is that this is starting to happen. Not uniformly and not without hesitation, but unerringly.
The Paradox of Profitable Caution
The reluctance of Indian corporations to invest has been one of the great puzzles of the post-pandemic economy. In his Economic Survey 2023-24, Chief Economic Adviser V. Anantha Nageswaran memorably noted that Indian companies were “swimming in excess profits” without investing aggressively or creating adequate jobs. Corporate profits as a share of GDP hit a 15-year high in FY24 – yet capital spending remained muted.
The numbers clearly tell the story. Cash and cash equivalents of Nifty 500 companies reportedly rose 35% in just two years, growing to over ₹14 trillion by early 2025. Companies were flush but seemed to be piling up. CMIE data showed the private sector withdrew projects for four consecutive quarters through September 2025, with project withdrawals hitting ₹14.3 trillion in a single quarter – surpassing even the previous peak ₹13.4 trillion as of March 2019.
Why? The reasons are a familiar but sobering list.
Capacity utilization hovered around 74-75% – below the threshold that typically triggers expansion. Geopolitical volatility, from tariff wars to supply chain disruptions, has made our boardrooms wary. The scars of the IBC era – when over-indebted giants like Essar & Jet Airways were dragged into insolvency – have created a persistent risk aversion. Critically, domestic demand, while growing, has not grown fast enough to justify massive greenfield bets.
Things are changing, and fast
Yet beneath this cautious surface, a fairly monumental shift is taking place. Let’s look at the big picture first. According to the inaugural private sector investment outlook survey by the Ministry of Statistics and Program Implementation (MoSPI) released in 2025, private sector capital expenditure grew by 66.3% in the four years from FY22 to FY25.
The largest share was absorbed by the manufacturing industry with 43.8%, followed by information and communication technologies with 15.6%. Gross fixed assets of non-financial companies listed in India (including oil and gas) grew by 20% year-on-year to ₹60.8 trillion by September 2025. The capital expenditure cycle has shifted into a significantly higher gear according to hard numbers.
But it’s the individual corporate commitments that are truly breathtaking. S&P Global projects Corporate India’s cumulative capital to double to $850 billion over the next five years. The Tata Group alone has outlined plans to invest around $120 billion, including in aerospace, semiconductors and electronics.
The Adani Group has announced $100 billion over the next decade, primarily focused on ports, airports and green energy. Reliance Industries is expected to deploy $60 billion over 10 years, according to Morgan Stanley estimates — it has already invested more than $80 billion since the pandemic. These are not tentative finger drops; these are strategic bets of a generational scale.
Semiconductors: Evidence of Potential
If one sector captures the new ambition of Indian private equity, it is semiconductors. India, one of the world’s largest consumers of electronic goods, has so far produced virtually no chips domestically. The absurdity is being corrected with astonishing speed.
Tata Electronics has committed to more ₹91,000 crore (approximately US$11 billion) to build India’s first commercial semiconductor manufacturing plant in Dholera, Gujarat, in partnership with Taiwan’s Powerchip Semiconductor Manufacturing Corporation. The facility will produce chips for AI, automotive and computer applications with a capacity of 50,000 wafers per month. Other ₹27,000 crore is being invested in the assembly and testing facility in Assam. Together, these projects are expected to create over 47,000 direct and indirect jobs.
In December 2025, Intel signed a landmark memorandum of understanding with Tata to explore the manufacturing and packaging of Intel products in these facilities – confirmation that the global semiconductor giants are serious about India’s ambitions.
Under the India Semiconductor Mission, at least 10 projects with a cumulative investment of over USD 18 billion have been approved across six states. Micron Technology has committed more than $2.75 billion. This is no longer a political aspiration; it’s a construction site.
The rise of green energy
In 2025, India achieved something remarkable that has been largely under-celebrated: 50% of its total installed electricity generation capacity now comes from non-fossil fuel sources, reaching this milestone five years ahead of its 2030 Paris Agreement commitment. Total non-fossil installed capacity tripled from 81 GW in 2014 to 262 GW, with just 2025 added a record 50 GW of renewable capacity. Solar capacity alone has seen a 42-fold increase since 2014, from less than 3 GW to more than 123 GW.
Private equity is at the heart of this transformation. The Adani Group has announced plans to invest $21 billion in renewable energy to reach 50 GW of capacity by FY30. ReNew disclosed an investment of ₹82,000 crore ($9.3 billion) in Andhra Pradesh alone for several green energy projects.
Between 2017 and 2025, India has attracted more than $62 billion in energy transformation investments. The energy and transmission sector is expected to account for roughly $300 billion in new investment over the next five years — more than a third of the $850 billion in total corporate investment projected by S&P.
Macro tailwind compensation
Several structural forces are converging to make this the most favorable environment for private investment in more than a decade. The RBI cut the benchmark repo rate by a cumulative 125 bps until 2025, bringing it down to 5.25% from 6.50% – a dramatic reduction in the cost of capital.
Both wholesale and consumer inflation fell to multi-year lows. The 2019 corporate tax rate cut, which brought the effective rate for new manufacturing companies to 17%, continues to improve after-tax returns on investment. And the government’s own capital, budgeted at ₹11.21 trillion for FY26 continues to pile up in de-risking private investment in sectors such as infrastructure and logistics.
New reform signals flow from this. The opening of the nuclear energy sector to private and foreign participation, new labor codes and insurance sector reforms are expanding the boundaries of investment. Manufacturing-related incentive programs across 14 sectors have seeded manufacturing ecosystems in electronics, pharmaceuticals, textiles, circularity and advanced chemicals, creating a certainty of demand that de-risks private capital spending.
A strategic opportunity – and who will seize it
What sets this moment apart is that India’s smartest corporates don’t view capital spending as a cyclical response to demand, but treat it as a strategic weapon—a means of securing competitive positions in sectors that will define the next quarter century.
Aditya Birla Group flagship Grasim Industries reported 30% year-on-year growth in consolidated fixed assets at ₹1.25 trillion by September 2025, driven by its aggressive entry into decorative paints and building materials. UltraTech Cement, Adani Ports and JSW Energy all added capacity through a mix of organic investments and acquisitions. Tata Steel posted 13.6% growth in capex in H1 FY26 alone. The diversification is remarkable: not just bets on the commodity cycle, but structural plays on urbanization, energy transformation and supply chain reconfiguration.
Perhaps the most telling is the sector breadth. The MoSPI survey found that almost 40% of firms plan to invest in expanding core competencies, while 12% are pursuing purely opportunistic investments. Emerging sectors – green hydrogen, semiconductors, battery manufacturing, data centers, circular economy – are expected to attract US$50-100 billion in investment. India’s multi-fab semiconductor vision for Dholera alone is expected to create more than 100,000 skilled jobs.
The second engine ignites
None of this suggests that private equity spending has universally arrived. The MoSPI survey itself brings caution: its 2,172 respondents represent only 0.001% of India’s approximately 1.8 million registered companies.
Investment remains heavily concentrated among a handful of conglomerates. Only about 1% of intended investment spending goes to green goals. And the projected decline for FY26, while reflecting conservatism rather than a retreat, is a reminder that global uncertainty has not gone away.
But the direction is clear. India’s corporate balance sheets are at their strongest in two decades. The debt-to-equity ratio is at historic lows. The government has built the roads, the ports, the digital backbone and now the semiconductor and green energy policy architecture that private capital needs to scale. Interest rates are falling. Demand driven by a 1.4 billion consumer market and rapid urbanization provides the gravitational pull.
The big handover of capital spending—from public to private, from caution to conviction—is not a prediction. It is a transition already in motion. Corporations that move decisively now will not only drive India’s growth; they will shape it. Those who wait may find that the window of strategic advantage, like all windows, will eventually close.
Masood Mallick is the Managing Director and CEO of Re Sustainability Limited
Key things
- Private sector investment is starting to pick up, indicating a shift in investment patterns.
- Major corporations are investing significant funds in industries such as semiconductors and renewable energy.
- Structural economic factors and government reforms create a favorable environment for private investment.
