Amid an uncertain global environment, capital expenditure by the private sector is expected to remain robust in the current financial year, projected at ₹3.2 trillion compared with ₹2.6 trillion in the previous year, according to a report in the Reserve Bank of India’s September bulletin.
Sustained confidence among the private sector is reflected in the aggregate cost of projects in FY26, a record ₹4.4 trillion compared with ₹3.7 trillion in FY25, with infrastructure continuing to dominate the investment landscape, led by the power sector. At the same time, the report emphasised the importance of timely implementation of sanctioned projects and the evolution of the external environment for the pace of actual capital formation.
The phasing profile of pipeline projects financed through all three channels — banks and financial institutions (FIs) sanctions, external commercial borrowings (ECBs), and initial public offerings (IPOs) — points to an increase in envisaged capital expenditure in 2026-27 over the previous year, suggesting that the private investment cycle is likely to retain its momentum and continue to support growth.
“Looking ahead, the investment outlook is expected to remain healthy, although heightened global uncertainties are likely to temper the investment sentiment,” said the report, authored by Purnendu Kumar, Snigdha Yogindran, Sukti Khandekar and Bhavyashree K from the Department of Statistics and Information Management at the RBI. It was clarified that the views expressed in the report are those of the authors and not of the central bank.
The report said the balance sheet position of Indian corporates has strengthened considerably over recent years, driven by deleveraging and robust internal accruals. Simultaneously, the domestic banking system, underpinned by strong capital and liquidity buffers, improvement in asset quality, and sustained credit growth, continues to support economic activity.
During 2025-26, the infrastructure sector remained the major sector, accounting for a 54.2 per cent share in the total cost of projects, primarily driven by investment in power, followed by roads and bridges. Besides infrastructure, among the other major industries, construction, chemicals and pesticides, metal and metal products, and cement also accounted for a sizeable share in the total cost of projects.
Among states, Maharashtra emerged as the top destination for capex projects, followed by Gujarat, Rajasthan, Karnataka, Andhra Pradesh and Tamil Nadu. These six states together accounted for a 67.1 per cent share in the total cost of projects during 2025-26. The share of Maharashtra, Rajasthan and Karnataka improved over the previous year.
The report further noted that financing through the ECB route strengthened, although funds mobilised through the IPO route declined.
During 2025-26, 12 mega projects and 100 large projects were sanctioned by banks and FIs. The share of mega projects and large projects in total project costs was 17.0 per cent and 51.3 per cent, respectively.
Greenfield, or new, projects accounted for 89.2 per cent of the total cost of projects reported by banks and FIs during 2025-26, broadly in line with the trend observed in previous years, the report said.
The report noted that the predominance of greenfield investments in the project pipeline reflects ongoing capacity expansion and confidence in the medium-term growth outlook. At the same time, alternative financing channels, such as ECBs, foreign direct investment (FDI) and private placements, have broadened the financing base for corporate investment.
While investment intentions remain encouraging, the pace of actual capital formation will depend on the timely implementation of sanctioned projects and the evolution of the external environment.
