India: Private Sector Remains Bullish On Capex

New Delhi: Despite the geopolitical challenges in Indian economy like weak demand, trade war on tariffs, and high borrowing costs among others, India’s private corporate sector remained bullish on capital expenditure or capex, as over 30 per cent of firms in the private corporate sector planned to invest in upgradation in FY 2024–25, supporting the sharp increase in capital expenditure or capex last fiscal, a government survey showed on Tuesday.

As per the survey conducted by the ministry of statistics, the findings indicate that nearly 49.6 per cent of private corporate sector enterprises undertook capex in 2024–25 primarily for income generation. “An additional 30.1 per cent directed their investments toward upgradation, while around 2.8 per cent focused on diversification. And remaining 17.5 per cent of enterprises reported using their capex for other reasons,” the ministry’s survey said.

The primary objective of the capex survey, the ministry noted, is to estimate the capex trends of private corporate sector enterprises from the past three financial years (2021-22, 2022-23 and 2023-24), along with anticipated capital expenditure for the current year (2024-25) and upcoming financial years (2025-26).

The slightly lower intended capex for FY2025-26, though still above the FY2023-24 levels, reflects cautious planning after a strong FY2024-25. Overall, the trend indicates growing corporate confidence and a judicious approach to investment amid improving economic certainty,” the ministry said in a statement.

According to the findings, the average gross fixed assets per enterprise in the private corporate sector increased from Rs 3,151.9 crore in 2021–22 to Rs 3,279.4 crore in 2022–23 (4 per cent growth), and further to Rs 4,183.3 crore in 2023–24, reflecting a significant 27.5 per cent growth. “The strategy of 40.3 per cent of enterprises is to undertake capex on core assets during 2024–25, followed by 28.4 per cent to invest in value addition to existing assets,” the survey said.

In 2022–23, the Parliamentary Standing Committee recommended that the ministry of statistics develop a comprehensive methodology to capture capex data from the private sector. “A total of 2,172 enterprises submitted complete information for all five years of the reference period, forming a fixed panel. The results show an overall increase of 66.3 per cent in aggregate capex (unweighted) over the four-year period from 2021-22 to 2024-25,” the survey said.