India’s private sector is driving investment momentum, with new project plans touching ₹9.95 lakh crore in April–September 2025, a 15-year high. Yet, foreign project announcements have slipped to a five-year low and government-led projects are at their weakest in at least 15 years, according to CMIE data analysed by The Hindu.
The Story
The surge in projects was powered almost entirely by Indian private firms, which accounted for ₹9.35 lakh crore, or 94% of total announcements. This represents a 37.5% jump over the same period last year, and is the second-highest figure in 15 years for the first half of a fiscal.
By contrast, foreign companies announced only ₹0.6 lakh crore worth of new projects—a drop of nearly 28% compared with the first half of 2024–25. This marks the third consecutive year of decline, taking foreign proposals to their lowest level since 2020.
Government announcements also shrank sharply. Union and state governments together announced only ₹1.51 lakh crore in projects, a fall of over 71% compared to last year. This is the lowest in at least 15 years, highlighting a retrenchment in public capex at the start of the fiscal.
Interestingly, the fall in foreign announcements runs against the global tide. UNCTAD data show global foreign direct investment rose by 11% in 2024 compared with 2023, suggesting India-specific factors may be dampening new commitments.
Why It Matters
The divergence signals two trends shaping India’s investment climate:
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Strong domestic business confidence — despite global headwinds, Indian firms are committing capital at scale, possibly driven by resilient demand and government incentives such as the PLI schemes.
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Weak foreign appetite and slowing state push — the slump in foreign project announcements raises questions about India’s positioning in global value chains, while the fall in government projects could slow public capex’s role as an investment driver.
Background / Context
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Private investment cycle: Historically, private capex lags public investment. The current data show a reversal, with domestic firms taking the lead.
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Global FDI flows: UNCTAD notes that FDI rose globally in 2024, suggesting India’s fall is not due to external contraction but domestic bottlenecks such as high valuations, tariff uncertainty, and infrastructure/logistical frictions.
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Government role: India’s last decade of infrastructure expansion leaned on government projects and PSUs. The sharp fall in new proposals may signal fiscal restraint or implementation lags.
Implications
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For growth: Rising private capex bodes well for medium-term growth and job creation.
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For foreign investment strategy: India may need to recalibrate policies to remain attractive to foreign firms, especially as competitors like Vietnam and Mexico continue to gain.
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For fiscal policy: With public investment at multi-year lows, sustaining the growth cycle will require careful balancing of fiscal prudence with capital spending.
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For markets: High domestic investment but weak FDI inflows could keep the rupee under pressure and limit external financing cushions.
Conclusion
India’s investment cycle is now being carried on the shoulders of its private sector, which is showing confidence despite global and domestic uncertainties. Yet, the slump in foreign and government projects raises red flags about the breadth and balance of the country’s capital formation story. To sustain momentum, India will need not just the energy of its private firms but also renewed policy support to attract global capital and steady government spending.
