Stories
Private Capex Remains Subdued As Demand Uncertainty Weighs On Investment
- •Private corporate capital expenditure remains subdued after the post-pandemic rebound, with average capex per enterprise staying at Rs 160 crore in FY25, FY26, and projected FY27.
- •The gap between investment plans and actual spending widened as the ratio of actual to intended capex dropped to 96.3% in FY25 from 111.9% in FY23.
- •Companies are prioritizing balance-sheet deleveraging, cost optimization, and automation over greenfield capacity expansion due to inadequate demand visibility.
- •Manufacturing sector capex per enterprise declined from Rs 2.2 billion in FY23 to Rs 1.7 billion in FY25, with intended spending for FY27 dropping to Rs 1.9 billion.
- •Systematix highlights that despite government policy support, a broad-based private investment revival requires stronger demand and decisive rises in capacity utilization.
Key Questions Answered
Average private capex per enterprise remained at Rs 160 crore in FY25, stood at the same level in provisional FY26 figures, and is projected at Rs 160 crore for intended FY27 spending according to NSO surveys analyzed by Systematix. The ratio of actual to intended capex also fell to 96.3% in FY25 from a peak of 111.9% in FY23.
The Systematix report attributes the weakness in private investment primarily to inadequate demand visibility, subdued business sentiment, and capacity utilisation remaining below its 2012 peak. Rather than a lack of policy support, companies have prioritized balance-sheet deleveraging, cost optimization, and automation.
Manufacturing has failed to establish a sustained investment upcycle, with capex per enterprise declining from Rs 2.2 billion in FY22 and FY23 to Rs 1.7 billion in FY25 before a provisional recovery to Rs 2.1 billion in FY26 and a lower intended Rs 1.9 billion for FY27. Conversely, sectors like mining and quarrying, electricity and gas supply, and water and waste management saw increases in capex per enterprise.
