India’s Capex Cycle Expected to Gain Momentum Through FY2030

India’s capital expenditure cycle is expected to gather further momentum over the next five years, supported by higher public spending and a gradual acceleration in private-sector investment, according to a Morgan Stanley report.

The report projects that overall investment will increase 1.8 times to approximately USD 2.2 trillion by FY2030. This expansion would involve incremental capital expenditure of nearly USD 1 trillion during the period.

India’s investment rate is consequently expected to rise from the current level of 34.6% of gross domestic product to approximately 37.5% by FY2030.

Government Capex to Support Investment Growth

The central government is expected to maintain its budgeted capital expenditure of Rs 12.2 trillion, equivalent to approximately 3.2% of GDP. Infrastructure and defence are likely to remain important areas of public investment.

During April–May FY27, central government capital expenditure reached Rs 2.5 trillion. This represented approximately 20.5% of the annual budget allocation and an increase of 13.4% compared with the corresponding period of the previous year.

Roads and railways accounted for nearly 53.4% of the expenditure incurred during the two-month period. Capital spending by state governments remained comparatively moderate, while Central Public Sector Enterprises had utilised around 17% of their FY27 budgeted capital expenditure.

Private-Sector Investment Expected to Accelerate

Private capital expenditure is expected to strengthen gradually, aided by domestic demand, government policy support, easing input costs, improving supply chains and a prospective recovery in exports.

New and existing investment projects recorded sequential improvement during the June quarter. Manufacturing, electricity and information technology services were among the sectors reporting stronger investment activity. CA Sansaar