India's Corporate Sector Braces for a Significant Drop in Capital Spending

The private corporate sector in India is anticipating a sharp 25% decline in capital spending for the fiscal year 2025-26, as per a recent government survey. This downturn is expected to reduce investments from Rs 6.56 lakh crore to Rs 4.88 lakh crore.

Survey Highlights Cautious Investment Outlook

Conducted by the Ministry of Statistics and Programme Implementation (MoSPI) between November 2024 and January 2025, the survey reflects a cautious stance among enterprises towards future investments. Historical data shows fluctuating figures, with Rs 3.94 lakh crore in 2021-22, Rs 5.72 lakh crore in 2022-23, and Rs 4.22 lakh crore in 2023-24.

Manufacturing Leads in Capital Expenditure

Manufacturing companies have dominated the landscape, accounting for over 65% of total gross fixed assets from 2021-22 to 2023-24. The utilities sector, meanwhile, contributed 8-10%. For 2024-25, manufacturing continues to lead with 43.8% of the average capital expenditure per enterprise.

Investment Motives and Strategies

Nearly half of the enterprises (49.6%) are investing primarily for income generation, while 30.1% focus on technological upgrades. A mere 2.8% cited diversification as their investment reason. Machinery and equipment purchases are set to constitute over half of the total provisional capex in 2024-25.

Enhancing Data on Private Sector Investments

This inaugural survey by the National Statistical Office (NSO) aims to provide a detailed overview of India's corporate capital expenditure, following recommendations to improve private sector investment data.