Private Capex To Remain Subdued In FY26

Chennai: While central government capex spending in the first quarter of the current fiscal is comparable to the same period of FY24 and higher than FY25, private sector capex will remain subdued on heightened tariff uncertainty, finds Crisil.

The Centre’s capex progress at 24.5 per cent till June is comparable with 27.8 per cent in the same period of 2023-24. However, it is 52 per cent higher than 16.3 per cent in FY25 while state capex is 29.1 per cent higher, suggesting higher frontloading compared with the previous year’s election-related moderation.

Corporate capex, on the other hand, remains weak. RBI’s quarterly industrial outlook survey showed moderating business sentiment for the first quarter among manufacturers. Bank credit to corporates was weak at 5.5 per cent until June 2025 against 7.7 per cent in the same period of 2024.

NSO’s survey based on the aggregate of the over 2,100 firms that reported capex spends, private capex stood at Rs 6.56 lakh crore in FY25. In FY26 private capex is likely to moderate to Rs 4.89 lakh crore. Crisil expects increased global uncertainties could lower the actual spends in fiscal 2026.

In a highly uncertain global environment with rising protectionism, bilateral trade agreements lower trade barriers and offer predictable trade policies and improved market access. Over time, this will provide stable conditions for investment. The government also should improve ease of doing business and relax business regulations to improve private capex.