Private Capex Growth Remains Sluggish Despite Increase in New Projects

Private capital expenditure (capex) in India showed little improvement in the fourth quarter of FY25, despite a significant rise in overall project announcements. A report by Avendus Spark highlights a 22.7% year-on-year increase in new project announcements across both public and private sectors, totaling Rs 18 trillion in Q4FY25. However, the private sector's contribution to this growth was minimal, with only a 4% YoY increase in project announcements and a 9% decline for the full fiscal year.

Weak domestic consumer demand and rising global macro uncertainty were cited as key factors dampening private sector enthusiasm. This cautious approach has led to delays and downsizing in capex plans, further exacerbated by concerns over US tariff regimes and potential import surges from China.

Resilience in Select Sectors

Despite the overall downturn, certain sectors demonstrated resilience. The electricity and renewable energy sectors saw a 55% increase in private project announcements. Meanwhile, manufacturing and services experienced declines, with notable exceptions in textiles, food & agro, metals, and transport equipment, which registered strong growth.

Sharp Decline in Project Completions

Private project completions fell sharply by 41% YoY to Rs 965 billion in Q4FY25, with manufacturing, services, and construction/real estate sectors hit the hardest. However, mining project completions surged by 732% YoY, and electricity investments continued to rise, reaching Rs 5.6 trillion in the same quarter.

The outlook for FY26 remains cautious, with a projected 25% drop in intended private capex, reflecting the ongoing uncertainties and conservative stance among enterprises.