Indian companies capex: Moody’s sees $50bn a year FY26

Why India Inc. capex is back in focus

Indian companies are entering a phase where uncertainty is high globally, but domestic demand remains the main anchor. Senior executives from Moody’s Ratings and its Indian affiliate ICRA have said Indian corporates are well-positioned to navigate the current environment and will keep investing as demand gradually revives. The key argument is structural: most large Indian firms are still primarily driven by domestic consumption rather than exports. That reduces the immediate exposure to shocks such as US import tariffs. Even where global trade slows, they expect government-led demand support and supply chain shifts to help cushion the impact. Against that backdrop, Moody’s expects a steady pipeline of corporate capital expenditure over the next one to two years.

Moody’s estimate: $15–50 billion a year for rated firms

Moody’s Ratings said rated Indian companies will spend about $15–50 billion annually over the next one to two years on capital expenditure as firms add capacity. In a separate estimate cited by the agency’s executives, non-financial companies it rates are expected to spend around $10 billion annually over the next two years. Moody’s also linked the capex outlook to funding comfort: most firms are expected to finance the majority of capex through internal accruals. As a result, average portfolio leverage, measured as debt/EBITDA, is expected to remain at or near 3.0 times.

Moody’s also noted that investments to increase vertical integration and achieve net zero targets should keep spending elevated. In televised commentary attached to the same theme, corporate earnings over the next two years were described as growing at about 5% per year, which would support leverage stability.

Why US tariffs are not the main concern for most firms

Moody’s and ICRA executives said most Indian companies are not directly affected by US import tariffs because their focus remains domestic and export dependence is relatively low. That framing matters for Indian equity investors because it suggests the capex cycle is less likely to be derailed by trade-specific shocks, at least for domestically oriented sectors. They also pointed to government initiatives aimed at boosting private consumption, expanding manufacturing capacity, and increasing infrastructure spending as offsets to a weakening global demand outlook. Another supportive factor they highlighted is the ongoing shift in global supply chains, which could aid Indian manufacturing.

Demand and capacity utilisation: the 70% marker

Despite a supportive domestic story, capex is not uniformly strong across the corporate landscape. Executives noted that slowing urban demand over the last few quarters has hit growth at consumer-facing companies, and that has limited capex, especially among smaller firms.

Capacity utilisation across sectors was described as still around “70-odd per cent”, and the view expressed was that consumption would need to “fire” for utilisation to meaningfully improve. Higher utilisation typically drives the next leg of capacity addition, creating stronger visibility for capex decisions. On the consumption mix, rural demand has picked up, and the executives said recent measures such as income tax relief in the Union Budget and interest rate cuts by the Reserve Bank should help urban consumption over the next 1–2 years.

Reliance and oil and gas dominate the rated capex mix

Moody’s said India’s most valued firm, Reliance Industries, alone accounts for roughly 30% of the rated portfolio’s capex. Reliance’s annual capex budget was cited at around $15 billion, spread across business segments.

Sector concentration is also pronounced. Moody’s said the oil and gas sector and Reliance Industries together are expected to account for over 60% of rated Indian companies’ capex over the next couple of years. It added that seven rated oil and gas companies would account for around 30% of rated capex, spending about $15 billion annually to expand capacity and make green energy investments aimed at reducing carbon transition risk.

Moody’s also expects rated companies in automotive, metals and mining, and technology, media and telecommunications (TMT) to contribute about one-third of total capex, with spending of about $15–16 billion each year.

What the government’s private capex survey shows

India’s Ministry of Statistics and Programme Implementation (MoSPI) released its report titled “Forward-Looking Survey on Private Sector CAPEX Investment Intentions” on April 29, 2025. The report is described as India’s first official read on private sector capex intentions.

MoSPI’s survey indicated that private sector capex likely peaked in FY 2024–25, rising 66% to INR 6.56 trillion ($17.54 billion) from the FY 2021–22 level of $16.69 billion. The report projected that private capex could dip to INR 4.89 trillion ($17.8 billion) in FY 2025–26, but still remain above the levels seen in FY 2021–22 and FY 2022–23. Even with the expected decline, the fixed sample of enterprises showed a 23.9% increase in unweighted capex over FY 2021–22 to FY 2025–26.

Other trackers: moderation signals and project announcements

A report by SBI Mutual Fund said capex growth could moderate to single digits over the next two years after strong recent growth. It cited an elevated base of about 15% CAGR over the last four years (FY22–FY25) and projected overall corporate capex (public and private combined) to moderate to mid-single digit growth in FY26 and FY27.

Separate investment data cited showed that after strong growth in 4QFY24 and 1QFY25, corporate investments weakened again in 2QFY25. In 1HFY25, government investments declined 12.6% YoY (versus +33.8% in 1HFY24), while corporate investments rose 10% YoY (versus -1.4%), and household investments rose 12.2% (versus +17.6%). It also noted that fiscal investments fell from 5.1% of GDP in FY24 to 3.9% of GDP in 1HFY25.

CMIE data showed new investments falling to INR 7.3 trillion in H1FY25, down 40% from INR 12.14 trillion of new projects announced in H1FY24. This came after two years of strong capex growth, with gross fixed capital formation growth cited at 6.9% in FY23 and 8.9% in FY24.

Key numbers at a glance

Market impact: what these signals mean for investors

For equity investors, the Moody’s estimates reinforce that the capex cycle among rated companies is likely to stay active even if headline indicators show some moderation. The concentration in Reliance and oil and gas highlights where a large part of spending will originate, which can influence sectoral earnings visibility and order flows for capex-linked companies.

At the same time, the MoSPI survey suggests private capex momentum may have peaked in FY25 and could soften in FY26, even if it remains above earlier-year baselines. This fits with the broader moderation narrative from SBI Mutual Fund and the CMIE project announcement data. The operating link to watch is demand: the executives tied a meaningful improvement in utilisation and capacity addition to consumption strengthening, with urban demand expected to benefit from tax relief and interest rate cuts over the next 1–2 years.

Conclusion

Moody’s expects rated Indian companies to maintain elevated capex of about $15–50 billion a year over the next one to two years, led by Reliance and oil and gas, while leverage is expected to stay near 3.0x as firms rely on internal accruals. Official survey data from MoSPI points to a peak in private sector capex in FY25, followed by a projected dip in FY26 that still keeps spending above pre-2023 levels. The next key swing factor will be whether consumption, especially in urban India, lifts enough to push capacity utilisation meaningfully higher over the next 1–2 years.