Power, realty are bright spots amid capex gloom

While corporate India remains flush with capital, new investments are not keeping pace.

- Abhinaba Saha

The pattern of declining investments is well-known, with data from the Centre for Monitoring Indian Economy showing new investments shrank by 3% in FY24 before declining a further 5% in FY25.

This is mainly due to soft domestic demand and geopolitical uncertainty, said experts. The trend is also reflected in restrained spending on fixed assets as a proportion of revenue.

According to a Mint analysis of 400 BSE-500 firms (excluding those in banking, financial services, and insurance), their spending on fixed assets (such as land, equipment, and plants)—a key measure of capital expenditure—has declined significantly since the pandemic. The ratio dropped from nearly 6% in FY20 to a low of 4.8% in FY24, inching up slightly to 5.2% by FY25. This ratio’s median stood at 4.8% across the post-covid period.

The figures signal corporate hesitation to invest in capacity expansion amid uncertain demand, keeping most firms on the sidelines, noted experts.

At a deeper level, the caution becomes clear: a staggering 58% of companies typically committed just 5% or less of their revenue to capital expenditure between FY23 and FY25. Their decision to keep their powder dry highlights a widespread and persistent trend of corporate timidity amid uncertainties.