According to a recent report by Avendus Spark, India's private capital expenditure remained weak in the fourth quarter of fiscal year 2024-25 (Q25 of 4FY25).
Despite the overall rise in new project announcements, the contribution of the private sector remains soft due to multiple economic and geopolitical factors.
The report highlighted that new project announcements for the public and private sectors increased by about 22.7% year-on-year (YOY). 18 trillion in Q4FY25. However, during this period, private sector project announcements only increased by 4% year-on-year.
It said: “Private capital expenditure remains stagnant in Q4FY25. … New project announcements, including the public and private sectors, soared about 22.7% to Rs 18TN of Q4FY25.
In FY25, private project announcement will be a 9% stake in contract with Rs. 27TN's service and construction/RE fell sharply. Weak demand from domestic consumers, coupled with rising global macro uncertainty, has led to a significant decline in private capital expenditure announcements. ”
The electricity and renewable energy sectors in private announcements show that growth in key sectors such as manufacturing and services, on the other hand, increased the decline in new project announcements.
Announcements for manufacturing projects fell 5%, while the services sector fell 18% year-on-year.
However, in manufacturing, some segments, such as textiles, food and agriculture, miscellaneous manufacturing, metals and transportation equipment, reported significant growth.
In the full fiscal year, private project announcements fell by 9% to Rs. 27 trillion. This decline is mainly due to weak activity in the services and construction/real estate sectors.
The report attributes this trend to slow domestic consumer demand and increases global macroeconomic uncertainty.
In addition, continued focus on Trump-era tariffs and concerns about a surge in imports from China have undermined global trade and affected investor sentiment. These factors have made private companies cautious, resulting in delays or downsizing of capital expenditure plans.
Private project completion also dropped sharply in the fourth quarter. The value of completed private projects fell by 41% to Rs. 965 billion. In the sector, manufacturing fell 30%, services 70%, and construction and real estate fell 89%.
The completion rate of private projects fell by 31% to Rs. Rs 2.5 trillion. Fiscal Year 3.6 trillion.
However, there are still some highlights. Investment in the power sector soared by 55% of Rs. $5.6 trillion in Q4FY25, while mining rose 732% year-on-year. Only 25 billion of rupees. 3 billion a year ago.
Overall, the report shows that India’s private capital expenditure is facing huge headwinds despite resilience in some sectors.
