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Private capex losing steam in India: Can it delay the stock market revival? Experts decode

Livemint Markets

Published 15 Oct 2026, 11:43 am IST

While the Government of India has implemented a multi-pronged strategy, including aggressive public capital expenditure (capex) outlays in infrastructure, targeted production-linked incentive (PLI) schemes, and FDI liberalisation with new free trade agreements (FTAs), over the last few years to catalyse private sector investments, private capex in India has been languid after capex per enterprise peaked at ₹260 crore in FY23.

Brokerage firm Systematix Shares and Stocks (India), in its report on 15 October, highlighted the findings of capex surveys of the National Statistics Office (NSO), which showed capex per enterprise peaked at ₹260 crore in FY23 before falling to ₹160 crore in FY26, with intended FY27 spending showing no improvement.

Moreover, the conversion of intended capex into actual spending has weakened significantly, with the realisation ratio (RR) declining from 112% in FY23 to 96% in FY25, suggesting FY26-FY27 investments may undershoot current plans.

The provisional capex for FY26 and the intended capex for FY27 stand at ₹160 crore each, significantly lower than the actuals in FY23-FY24.

As per Systematix report, the survey showed capex in the manufacturing sector declined from ₹220 crore in FY22 and FY23 to ₹210 crore in FY24 and ₹170 crore in FY25, before recovering to ₹210 crore in FY26. The intended capex per enterprise for manufacturing in FY27 stands at ₹190 crore.

Agriculture, forestry and fishing, construction, wholesale and retail trade and repair of motor vehicles and motorcycles, information and communication, professional, scientific and technical activities, education, human health and social work activities, arts, entertainment and recreation are among the segments which have recorded lower or stagnant capex per enterprise in recent years.

However, non-conventional energy is exhibiting a positive trend, led by strong momentum in solar investments, as per the survey. Robotics is also emerging as a bright spot due to increasing automation and digital transformation trends.

"Solar energy capital expenditure was reported by 6.2% of private enterprises for FY26, moderating to 4.0% of private enterprises intended for FY27. Robotics-related capital expenditure proposals were reported by 2.8% of private enterprises for FY26, moderating to 2.3% intended for FY27," said Systematix.

Even though the Indian economy remains on a strong footing, corporate investment behaviour appears cautious due to weak demand visibility, slowing profit growth, rising costs, and geopolitical uncertainties.

According to Systematix, private capex may remain a laggard unless demand conditions improve meaningfully, leaving public investment and a handful of themes such as energy transition and automation to shoulder the burden of capital formation.

However, experts believe while the revival of private capex is important, the market at this point is focussing on near-term headwinds.

"The market has been weighed down mainly by three factors: one, the elevated crude prices; two, high US bond yields; and three, sustained FII selling. Capex has been deficient in India, as general demand conditions have been weak in many sectors and the highly uncertain geopolitical developments have been impacting the confidence of entrepreneurs to invest. However, big investments are happening in sectors like renewable energy, data centres, power and digital infrastructure," noted V K Vijayakumar, Chief Investment Strategist at Geojit Investments.

G Chokkalingam, the founder and head of research at Equinomics Research, said that while private capex slowdown is one of the reasons possibly for domestic equity market weakness, it is not a major reason, as the revenues of Nifty companies are still growing in double digits.

"In fact, many sectors have excess capacities. For example, cement, FMCG, etc., do have demand problems rather than supply constraints. On the other hand, some sectors like telecom, automobiles, etc., keep growing revenues without seeing any serious supply constraints," Chokkalingam explained.

Chokkalingam believes slowdown in private capex may have some impact on overall demand through investment demand. However, consumption demand is not badly affected in many domestic demand-driven sectors, which is reflected in double-digit revenue growth of Nifty companies. Demand for lending from both banks and NBFCs by retail customers remains robust in double digits.

According to Chokkalingam, as GDP growth also remains firm around 7%, macroeconomic fundamentals are not major underlying factors behind capital market weakness. It is the availability of liquidity which is largely responsible.

"While a strong rally in oil prices weakened the rupee considerably and constrained the liquidity available from foreign investors to the secondary markets, booming IPOs led to shrinking of liquidity available to the secondary markets from both foreign and domestic retail investors," Chokkalingam said.

"Unless global oil prices fall significantly and the IPO boom fizzles out, even revival of private capex cannot help much to the secondary markets of capital markets," said Chokkalingam.

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Originally reported by Livemint Markets.Source: livemint.com

Private capex losing steam in India: Can it delay the stock market revival? Experts decode

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