Key Points

Private corporate investment remained as one of the vital contributors to India’s long-term growth trajectory. After a period of subdued activity during the pandemic years, the investment cycle is being rejuvenated by a confluence of supportive factors.

In 2024–25, the macroeconomic backdrop is characterised by robust GDP growth, sustained disinflation, and a consequent conducive monetary policy stance, the article states.

Over the past few years, Indian corporates have undergone a phase of balance sheet repair, aided by deleveraging, improved cash flows, and strong profitability across several sectors. The banking sector’s improved asset quality and abundant liquidity have further enhanced the credit environment, translating into easier access to financing for capacity expansion.

Recent trends in high-frequency indicators -- such as rising imports of capital goods, improved capacity utilisation, and increased flows in corporate bond markets -- signal renewed investment appetite among firms.

Additionally, sector-specific policies, such as the Production-Linked Incentive (PLI) schemes, energy transition investments, and digital infrastructure expansion, are incentivising corporates to undertake fresh investments.

The domestic economy continues to demonstrate resilience, with real GDP growth of 6.5 per cent in 2024–25, making India the fastest-growing major economy, underpinned by robust domestic demand, and steady progress on public infrastructure investments.

Investment in green field (new) projects accounted for the lion share of about 92 per cent in the total cost of projects financed by banks and financial institutions during 2024-25, in line with the trend seen in the past.

Greenfield investment generally brings new and additional resources and assets to the firms and leads to gross fixed capital formation (GFCF).

Higher investment in green filed projects thus points to likely capacity expansion by private corporates going forward, according to the article.

The industry-wise distribution of projects sanctioned during 2024-25 indicates that the infrastructure sector remained the major sector accounting for 50.6 per cent share in the total cost of projects, primarily driven by investment in ‘Power’, followed by ‘Road & bridges’.

Beside infrastructure, among the other major industries, chemicals and pesticides, construction, electrical equipment, and metal & metal products also accounted for the sizable share in the total cost of projects.

- IANS