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Private capital expenditure in India continued to remain weak in the fourth quarter of the financial year 2024-25 (Q4FY25), according to a recent report by Avendus Spark.
Despite an overall rise in new project announcements, the private sector's contribution remained subdued due to multiple economic and geopolitical factors. The report highlighted that total new project announcements across both public and private sectors increased by around 22.7 per cent year-on-year (yoy) to Rs. 18 trillion in Q4FY25. However, within this, private sector project announcements saw only a marginal 4 per cent yoy rise. It said, "Private capex remains sluggish in Q4FY25....New project announcements, encompassing both public and private sectors, surged approx. 22.7 per cent to Rs. 18tn in Q4FY25. In FY25, private project announcements contracted 9 per cent yoy to Rs. 27tn led by a sharp decline in Services and Construction/RE. Weak domestic consumer demand, coupled with rising global macro uncertainty, has led to a notable decline in private capex announcements." The Electricity and Renewable Energy sector in the private announcements showed a growth of 55 per cent, on the other hand, key sectors such as Manufacturing and Services saw a decline in new project announcements. Manufacturing project announcements fell by 5 per cent yoy, while the Services sector saw a sharper drop of 18 per cent yoy. Within Manufacturing, however, some segments like Textiles, Food & Agro, Miscellaneous Manufacturing, Metals, and Transport Equipment reported significant growth. For the full financial year FY25, private project announcements fell by 9 per cent yoy to Rs. 27 trillion. This decline was primarily due to weaker activity in the Services and Construction/Real Estate sectors. The report attributed this trend to sluggish domestic consumer demand and increasing global macroeconomic uncertainty. Additionally, lingering concerns over Trump-era tariffs and fears of a surge in imports from China have disrupted global trade and affected investor sentiment. These factors have made private firms cautious, leading to delays or downsizing of capex plans Private project completions also declined sharply in Q4FY25. The value of completed private projects fell 41 per cent yoy to Rs. 965 billion. Sector-wise, Manufacturing dropped by 30 per cent, Services by 70 per cent, and Construction and Real Estate by 89 per cent. For the entire FY25, private project completions were down 31 per cent yoy to Rs. 2.5 trillion from Rs. 3.6 trillion in FY24. However, some bright spots remained. Electricity sector investments surged 55 per cent yoy to Rs. 5.6 trillion in Q4FY25, while Mining saw an exceptional rise of 732 per cent yoy to Rs. 25 billion from just Rs. 3 billion a year ago. Overall, the report showed that while some sectors are showing resilience, private capital expenditure in India continues to face significant headwinds. (ANI)
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