India’s private sector capital expenditure (capex) experienced a significant surge, growing by 67 percent to Rs 7.7 lakh crore in September 2025, up from Rs 4.6 lakh crore a year earlier, according to the Confederation of Indian Industry (CII). This substantial increase, highlighted by CII on Sunday, marks the most definitive evidence yet of a powerful and broad-based revival in the country’s investment cycle, impacting key sectors like manufacturing and services and setting a strong trajectory for India’s economic future.
Investment Revival: A Deep Dive into India’s Capex Boom
Capital expenditure, or capex, refers to the money companies spend to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment. It is a critical indicator of economic health and future growth potential, as increased capex signals business confidence, expansion plans, and the creation of new productive capacities. For India, a robust private capex cycle is essential for job creation, technological advancement, and sustaining high GDP growth rates.
Historically, India’s investment cycle has seen periods of ebb and flow, often influenced by global economic conditions, domestic policy shifts, and corporate sentiment. The recent data from CII suggests a decisive turnaround, moving beyond a phase where public sector spending largely drove infrastructure development to one where private enterprises are significantly ramping up their investments, reflecting renewed optimism in the market.
The Mechanics of the Surge and Sectoral Performance
The 67 percent jump in private capex, reaching Rs 7.7 lakh crore, represents a substantial injection into the Indian economy. CII’s analysis, drawing from nearly 1,200 companies within the CMIE Prowess database, provides a granular view of where this investment is concentrated. Manufacturing emerged as the primary driver, accounting for Rs 3.8 lakh crore, or nearly half of the total private investment. Within manufacturing, sectors such as metals, automobiles, and chemicals were at the forefront of this expansion.
The services sector also contributed significantly, attracting Rs 3.1 lakh crore, which represents approximately 40 percent of the total private capex. This growth in services was propelled by strong activity in trading, communications, and the IT/ITeS segments. The broad-based nature of this investment across both goods-producing and service-providing sectors underscores the comprehensive revival taking place.
Chandrajit Banerjee, Director General of CII, emphasized the significance of these figures, stating, “The 67 percent jump in private capex to Rs 7.7 lakh crore is, by some distance, the most important signal yet that India’s investment cycle has decisively turned.” He further highlighted other reinforcing indicators, including capacity utilisation hardening to 75.6 percent in Q3FY26 from 74.3 percent in the preceding quarter. New order books also experienced robust growth, rising 10.3 percent year-on-year, while bank credit growth averaged close to 14 percent in the second half of FY26, a notable acceleration from around 10 percent in the first half.
CII’s Strategic Action Plan Amidst Global Headwinds
In conjunction with the capex data, CII also unveiled a five-point action agenda designed to bolster the Indian economy through the ongoing West Asia crisis and beyond. This proactive strategy aims to sustain the current growth momentum and mitigate potential external shocks.
The first measure proposes a phased drawdown of the Rs 10 per litre central excise cut on petrol and diesel over six to nine months, contingent on crude prices stabilising. Banerjee noted that a calibrated restoration would progressively relieve the exchequer without disrupting consumer sentiment, with industry prepared to absorb a meaningful share of input cost pressures.
Secondly, CII advocates for a voluntary industry energy conservation compact. Member companies would commit to a 3-5 percent reduction in fuel and power consumption over the next two quarters. This initiative aims to reduce the country’s import dependence, with Banerjee underscoring that “every barrel saved at the factory gate being a barrel less the country has to import.”
A crucial proposal for small and medium enterprises (MSMEs) is a 45-day payment guarantee. Backed by the Trade Receivables Discounting System (TReDS) and supply-chain finance, this measure seeks to alleviate working capital pressures for these vital enterprises. Additionally, CII suggests supply-chain ringfencing, promoting deeper import substitution through diversified sourcing and enhanced domestic value addition in components, specialty chemicals, and capital goods.
Finally, the agenda calls for front-loading FY27 investments in critical areas such as manufacturing, energy transition, and digital infrastructure. This is coupled with voluntary price restraint by industries and a scale-up of internship intake under the Prime Minister’s Internship Scheme (PMIS), aiming to foster skill development and employment.
Government’s Role and Future Outlook
CII’s Director General, Chandrajit Banerjee, acknowledged the government’s pivotal role in cultivating an enabling environment for this investment surge. He cited sustained public capital expenditure, adherence to fiscal discipline, a modernized tax architecture, the Production-Linked Incentive (PLI) schemes, and Free Trade Agreements (FTAs) covering nearly 70 percent of global GDP as key contributors. These policy interventions have collectively instilled confidence and provided a stable framework for businesses to plan long-term investments.
The onus now lies on the industry to capitalize on this supportive ecosystem. “Industry’s task now is to convert this enabling environment into committed capacity, jobs, exports and value addition at scale,” Banerjee stated. Looking ahead, CII projects real GDP growth to exceed 7.6 percent in FY26, with exports potentially reaching an all-time high of USD 863 billion and foreign exchange reserves surpassing USD 700 billion.
These projections underscore a robust economic outlook, provided the investment momentum is sustained and the proposed policy measures are effectively implemented. The focus will remain on how industries translate this renewed confidence into tangible growth and how the government continues to foster a conducive policy landscape to support this upward trajectory.
