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From manufacturing to ICT, India's first private capex survey sheds light on who is investing, and why it matters.
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(This is the second part of a two-part series on India’s data evolution)
Capital expenditure, or Capex, has been a driving force in economic theory. It refers to and involves any investments undertaken by businesses to enhance their long-run performance. In India, the government's capex has been a significant fuel for economic growth, especially given the country’s state-heavy economic structure during the first four decades after independence. Following the 1991 Liberalisation, Privatisation and Globalisation (LPG) reforms, the private sector assumed a far more important role, raising the rate of economic growth to unprecedented levels. Thus, private capex has now become a critical driver of growth. However, until 2025, there was no macro-level survey to estimate and analyse private capex, impeding the potential and extent of policymaking.
Aggregate private capex has grown by almost 24 percent since 2021-22.
In response to recommendations from the Parliamentary Standing Committee on Finance, the Ministry of Statistics and Programme Implementation (MoSPI) launched the Forward-Looking Survey on Private Sector CAPEX Investment Intentions (PSCII). This maiden survey has captured data on capex investment and intentions of private sector enterprises listed with the Ministry of Corporate Affairs. It aims to evaluate the specific turnover thresholds of larger enterprises and create a sample frame with 16,025 enterprises. Thus far, 5,380 firms have been surveyed, based on the categorisation of sample and census enterprises. After incorporating the survey responses and intentions of future capex, 2,172 enterprises were included in the study results.
The study revealed that aggregate private capex has grown by almost 24 percent since 2021–22. However, these numbers should not be taken at face value since they represent only a modicum of the Indian private sector, which comprises nearly 1.8 million companies. That said, they indicate broader market sentiment, useful for extracting policy inferences. For instance, the study reveals that the manufacturing sector has been one of the largest investors in the Indian economy, followed by the Information and Communication Technology (ICT) sector. However, when considering the actual investment per enterprise, human health and social work activities top the chart, followed by ICT and power sectors.
Nearly 40 percent of firms want to invest in their core competencies, while around 12 percent want to take up opportunistic investments.
Furthermore, the study highlights an important feature of India’s economic structure. These 2,172 firms intend to incur capex to the tune of INR 4.9 trillion in 2025–26. This represents the investment intentions of only 0.001 percent of firms. Compared to the government’s intended capex of INR 11.21 trillion, this figure serves to reveal the current standing of the private sector in India. Although the growth of private capex may not follow a linear trajectory, it is projected to significantly exceed government capex. This underscores the effectiveness of monetary policy over fiscal policy in India. The government must therefore enhance the ease of doing business to achieve its Viksit Bharat vision.
India’s robust growth in the post-COVID period was accompanied by similar progress in private sector performance. The Gross Fixed Assets (GFA) per enterprise increased by 33 percent, indicating solid capital accumulation and deepening. This directly seeps into productivity and enhances the value addition of the private sector. Nearly 40 percent of firms want to invest in their core competencies, while around 12 percent want to take up opportunistic investments. While a majority of the investments are purported for income generation and capacity upgradation, only a little over 1 percent has been earmarked for green goals.
Although the manufacturing sector holds 70 percent of the total GFA, the power sector accumulated the highest GFA per enterprise, corroborating the private power sector’s heft and size in the economy. It also hints towards an oligopolistic market in the power sector compared to a more competitive market in manufacturing. Given that the former is a major source of inputs for the latter, the government can design policies to lower factor prices and establish economies of scale. In contrast, finance and insurance sectors have registered the lowest GFA per enterprise, highlighting their labour-intensive nature when their share in output is taken into consideration.
The Realisation Ratio (RR), which defines the amount of planned investment actually made, dipped significantly in 2023-24.
The Realisation Ratio (RR), which defines the amount of planned investment actually made, dipped significantly in 2023–24. Some possible reasons include uncertainty, over-investment, costlier capital, or policy disruptions. As of 2023–24, the agricultural sector recorded the highest RR, followed by ICT, and accommodation and food services. In contrast, the RR for manufacturing experienced a sharp decline, primarily due to a demand slowdown triggered by the global economic slump. Targeted enabling policies and effective risk-hedging mechanisms can play a crucial role in revitalising the RR in the manufacturing sector.
Only the manufacturing sector has allocated over 4 percent [of capex] for green plans, whereas no other sector has shared any tangible green plans.
Although most sectors have targeted their capex towards core activities, the power, trade, and transportation sectors have earmarked a sizeable chunk for opportunistic ventures, establishing a solid foundation to foray into potentially profitable sectors. The manufacturing sector also intends to invest a major fraction of its capex in value-added activities – a direct implication of the Production Linked-Incentive (PLI) Scheme. This has pushed the manufacturing sector to invest in upgradation. However, the scope and proportion of capex allocated to energy transition and/or conservation efforts is relatively narrow. Only the manufacturing sector has allocated over 4 percent, whereas no other sector has shared any tangible green plans. The government should particularly focus on incentivising sustainable practices in energy-intensive sectors such as power, alongside other areas.
The PSCII has revealed important characteristics of the private sector and its capex intentions. Sectoral capex intentions, enterprise sizes, and RRs can aid the government to judiciously allocate resources. A framework must be designed to incorporate and present the survey findings into quantifiable and actionable policy imperatives. Capex intention slowdowns or a shrinkage in RR should be met with tax breaks or temporary subsidies. Concurrently, the concentration of fixed assets within limited firms must be addressed by utilising antitrust laws. Most importantly, monetary policy—particularly interest rate decisions—can be more effective when capex intentions are clearly understood. Future editions of the PSCII must therefore expand their sample frame and explore a broader range of business attributes.
Arya Roy Bardhan is a Research Assistant at the Centre for New Economic Diplomacy, Observer Research Foundation.
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Arya Roy Bardhan is a Research Assistant at the Centre for New Economic Diplomacy, Observer Research Foundation. His research interests lie in the fields of ...
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