Private CapEx Growth to Remain Muted in FY26, but India’s Long-Term Investment Story Stays Intact

Private sector capital expenditure (CAPEX) in India is expected to remain largely flat in FY26, according to a recent S&P Global report. While the near-term outlook indicates a pause in large-scale private investments, the agency underscores that the long-term prospects for capital formation remain robust, with potential investments running into several hundred billion dollars over the next few years. Short-Term Pause in Big-Ticket Investments : S&P Global notes that a combination of factors is likely to temper private sector CAPEX growth in FY26. Rising borrowing costs, global macroeconomic uncertainties, and cautious corporate sentiment are prompting companies to defer or stagger large expansion plans. Sectors such as heavy manufacturing, real estate, and infrastructure are expected to adopt a wait-and-watch approach until there is more clarity on global growth and domestic demand trends. This slowdown follows a strong capex cycle in the last three fiscal years, when many Indian conglomerates, buoyed by post-pandemic recovery and government policy support, aggressively expanded capacity in sectors like steel, renewable energy, and electronics manufacturing. Medium- to Long-Term Outlook Remains Strong : Despite the short-term softness, S&P Global emphasizes that the structural drivers for private investment in India remain intact. The country’s ongoing economic reforms, government-led infrastructure push, stable macroeconomic fundamentals, and a large consumer market are expected to attract fresh investments in the medium to long term. Sectors such as green energy, digital infrastructure, semiconductors, and advanced manufacturing are projected to lead the next wave of private capex. As India positions itself as a global manufacturing hub and supply-chain alternative, private companies are likely to invest heavily to meet rising domestic and export demand. Implications for Economy and Markets : A near-term slowdown in private capex could weigh on job creation and moderate the pace of economic growth in FY26. However, economists point out that public sector capex — led by central and state governments — continues to remain strong and may partly offset the private sector slowdown. For equity markets, analysts expect mixed implications. Infrastructure-related stocks may face some pressure in the short term, while long-term investors could view any correction as an opportunity, particularly in sectors aligned with India’s structural growth story. The Bottom Line : While FY26 might not witness a surge in big-ticket private investments, the broader narrative of India’s growth remains positive. S&P Global’s findings suggest that India’s private sector is taking a strategic pause rather than retreating. Over the next few years, the stage is set for a substantial private capex boom, reinforcing India’s ambition to emerge as a key driver of global economic growth. - MarketForesee Research Desk ------------------------------------------------------------------------------------------------------------------------- Private CapEx India | S\&P Global Report | FY26 Investment Outlook | Indian Infrastructure | Long Term Growth | Indian Economy | Capital Expenditure Trends | Manufacturing Investments | Green Energy Capex | India Growth Story