In this financial year, FY26, the Private sector capex can witness a massive fall owing to the brewing global uncertainties. As per a survey done on Private Sector Capex Investment Intention, the investments may dip to ₹4.88 lakh crore, which stood at ₹6.56 lakh crore in FY25. As per the Finance Ministry, it is not the trade but the anticipation of continuing global turmoil that can keep the private sector players off from capital expenditures this fiscal. 

What is this Survey all about? 

The survey conducted by the ministry considered 3064 enterprises out of which 2172 enterprises shared their capex plans for FY26. This survey was done between November 2024 and January 2025. 

In this survey, 43% of the enterprises did not even report their capital expenditure for FY26 as there is no plan of making capital expenditure this fiscal. However, 32% enterprises showed interest in increasing capital expenditure in FY26. Another 20% expect no change in their capex investment for FY26 compared to FY25 while remaining 4% even intend to decrease capital formation in this fiscal. 

Sectoral Capex Anticipation

The sectors that have not been contributing anything to the private sector capex in FY26
growth includes – 

• Mining and quarrying 
• Electricity and gas
• Air conditioning supply
• Retail and wholesale trade and repair of motor vehicles 
• Motorcycle sector

On the other hand, the manufacturing sector, healthcare, and education sectors are planning to increase their capital expenditure in FY26 by whopping 50%. These three sectors have been pivotal in private corporate sector capex building since FY21 even when the economy was sluggish. 

Impact of the Lower Capex Growth

The lower private capex rate for FY26 shows India’s vulnerability to the global turmoil, geopolitical disturbances, global trade war, even when this is the Fifth-largest economy. Having said that, the domestic economy is resilient and large enough for capital formation, which can help in boosting demand, income, investments, and additional capacity. The Ministry is hopeful about the domestic economy being able to pull this off and reinforce the cycle of investment and income. 

However, the ministry also stated that whole the domestic outlook is positive, with continuous fiscal discipline, but the global developments can screw things up putting pressure on private capex. So, it has directed the businesses to be more vigilant and analyze the geopolitical risks, as the commodity prices and overall economy can be badly affected, especially disrupting the supply chain. 

So, to keep the economy shielded from the global headwinds, every opportunity needs to be assessed and acted upon as soon as possible, as per the ministry in its economy review. 

Source: CNBC TV18

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