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Private investments dominate India's capex landscape in H1: Report

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  Published in Business and Finance on Monday, October 27th 2025 at 2:24 GMT by moneycontrol.com
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Private Investment Takes the Lead in India’s Capital Expenditure Surge, Report Finds

A new analysis of India’s capital expenditure (CapEx) for the first half of 2023 reveals that private sector spending has become the dominant force driving investment in the country’s economy. The report, compiled from data provided by the Ministry of Statistics and Programme Implementation and corroborated by a sector‑wide survey conducted by the Confederation of Indian Industry (CII), shows that private firms accounted for more than 70 % of total CapEx, a sharp increase from 60 % in the same period of 2022.

A 12 % Jump in Private CapEx

Total capital spending in India rose to an estimated ₹14.8 trillion in H1 2023, up 12 % year‑on‑year. Private‑sector CapEx alone reached ₹10.3 trillion, a growth of 15 % compared with the previous year, while public‑sector spending rose by only 8 %. The surge is attributed to a combination of domestic demand, supportive policy frameworks and an influx of foreign direct investment (FDI) into technology‑intensive sectors.

The private investment wave is particularly evident in manufacturing, where firms like Tata Motors, Mahindra & Mahindra, and Reliance Industries expanded production lines and upgraded equipment. Manufacturing CapEx grew by 18 % to ₹5.9 trillion, driven by the Production‑Linked Incentive (PLI) scheme, which offers tax credits to companies that manufacture key electronics and automotive components in India.

Infrastructure and Digitalisation Drive Growth

While manufacturing remains the largest contributor, other sectors such as infrastructure and information technology have also seen significant private investment. Infrastructure CapEx, largely funded by private‑sector joint ventures and public‑private partnership (PPP) projects, grew by 10 % to ₹3.4 trillion. This includes major projects in roads, ports, and railways that benefit from the government’s “Build‑Operate‑Transfer” model.

Digital infrastructure has become a major driver, with private firms investing heavily in data centers, 5G networks, and cloud services. The report cites an increase of 25 % in CapEx for data‑center construction, aligning with the broader push toward a digital economy under the Digital India initiative.

Renewable Energy Investment Hits Record

Renewable energy continues to attract strong private capital. Private investment in renewable projects rose by 20 % to ₹1.2 trillion, reflecting India’s commitment to a 175 GW renewable energy capacity target by 2025. Solar and wind projects, in particular, benefited from government subsidies and favorable feed‑tariff structures that have made the sector attractive to both domestic and foreign investors.

Policy and Fiscal Reforms Catalyse Private Spending

The report highlights several policy measures that have contributed to the rise in private CapEx. The reduction of corporate tax rates to 22 % for small and medium enterprises (SMEs) under the Income Tax Amendment Act 2022 has lowered the cost of capital. Additionally, the introduction of the “Make in India” 2025 framework, which offers incentives for advanced manufacturing, has helped firms plan long‑term investments.

A recent government announcement to increase infrastructure spending to 10 % of GDP for 2024–25 has also been interpreted by market analysts as a signal that private capital will play a key role in meeting this target. The Ministry’s “Infrastructure Investment Blueprint” includes provisions for private sector participation in large‑scale projects such as the Mumbai‑Bangalore high‑speed rail corridor and the development of smart cities across the country.

Impact on Jobs and Economic Growth

The surge in private CapEx is expected to create millions of jobs in the coming years. According to the CII survey, each ₹1 trillion of private investment could generate roughly 20,000 direct and indirect jobs. With private CapEx projected to reach ₹20 trillion by the end of 2023, the employment outlook remains positive, especially in manufacturing and technology hubs.

Economists project that sustained private CapEx growth could help India achieve a GDP growth rate of 6–7 % in 2024, compared with 4.5 % growth seen in 2022. The report warns that the private sector’s continued engagement is essential for maintaining momentum, particularly in the wake of global supply‑chain disruptions and increasing commodity price volatility.

Looking Ahead

The report’s authors emphasize that while the private sector is currently leading, there is an urgent need for complementary public investment, particularly in rural infrastructure and skill development, to ensure inclusive growth. They also call for transparent data collection mechanisms to track private CapEx more accurately, noting that the current estimates rely on self‑reported figures and may understate the true magnitude of private spending.

In summary, the first half of 2023 has underscored a decisive shift in India’s investment landscape: private firms are not only taking the lead in capital expenditure but also shaping the country’s industrial, digital, and renewable energy trajectories. The trend points toward a more dynamic, privately driven growth model that could deliver higher output, employment, and technological advancement in the years to come.