Private Industrial Capex to Touch Rs 6.7 Lakh Cr in FY28

 Chennai: Private industrial capex is expected to go up 52 per cent from Rs 4.4 lakh crore in FY24 to Rs 6.7 lakh crore in FY28 as India transitions to value-added manufacturing, increases capacity utilization in conventional sectors and attracts green energy investments.

Between 2019 and 2023, industrial capex was largely driven by infrastructure development funded by central and state governments as well as household demand. As India moves forward, while infrastructure capex is expected to continue to grow, private sector investments are also stepping up in conventional industries as well as emerging sectors, finds Crisil.

Capex-intensive conventional sectors, which account for 70 per cent of the industrial capex, are likely to maintain capacity utilization above decadal averages. Supported by their deleveraged balance sheets and strong financial profile, these sectors are likely to increase their capex.

Emerging sectors such as electric vehicles, semiconductors and electronics are poised to become main drivers of industrial capex with India focusing on value-added manufacturing. These segments may account for more than 70 per cent of non-PLI emerging sector capex.

Between FY25 and FY28, PLI schemes and emerging sectors are together set to account for a quarter of India’s capex as against 10 per cent between FY21 and FY24. PLI-driven capex is expected to peak by FY26 as approved projects target to meet their commitments to avail incentives.

Investments in emerging sectors will strengthen India’s manufacturing capabilities, aligning with its broader goals of self-reliance and making local production globally competitive.

Further, the green energy sector has become a hotspot for investments with ambitious renewable energy targets. Solar and wind power are supposed to benefit from this. Major corporations are also increasingly investing in sustainable infrastructure projects such as green buildings and efficient transportation.

Green investments and renewable energy can stimulate economic growth by attracting foreign investments, creating green jobs and reducing dependency on fossil fuels. In order to grab green investments, India must address challenges in technology and infrastructure.