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More than half of Indian companies expect capacity utilisation to exceed 80 per cent in the second half of 2026, a level that could encourage fresh private-sector investment in the coming quarters, according to the Confederation of Indian Industry's latest Business Outlook Survey.
The 136th round of CII's Quarterly Business Outlook Survey showed that 51.6 per cent of respondents expect capacity utilisation above 80 per cent in H2 2026, compared with 36.6 per cent in the first half of the year. "More than 50% of respondents anticipate operating above 80% capacity in H2 2026, compared with 36.6% who reported such levels in H1," the CII report said, adding that the increase was consistent with a stronger demand outlook and pointed to a pick-up in production activity. The share of firms operating below 75 per cent capacity is also expected to decline to 25.9 per cent in H2 from 35.1 per cent in H1, indicating that the improvement is expected across a wider set of companies rather than being concentrated among a few firms. The expected rise in utilisation comes alongside stronger demand expectations. Around 61 per cent of respondents expect domestic demand to increase in Q2FY27, while only 9.6 per cent foresee a decline. The proportion of firms expecting demand growth of more than 20 per cent has also risen to 16 per cent in Q2FY27 from 12.9 per cent in the previous quarter. Commenting on the broader business outlook, CII Director General Chandrajit Banerjee said, "The steady improvement in business activity, backed by robust domestic demand and stable macroeconomic indicators, reinforces the perception that the government's facilitative policies will support a faster expansion in output and new orders, creating fresh opportunities for firms in India and abroad." Business confidence also recovered during the quarter. CII's Business Confidence Index rose by 5.2 points to 66.0 in Q2FY27 from 60.8 in Q1FY27, returning to the same level recorded in Q2FY26. The report attributed the rebound largely to easing disruptions stemming from the West Asia conflict. Expectations about future conditions improved more sharply, with the Expectation Index rising to 67.7 from 60.6 in the previous quarter, while the Current Situation Index increased to 62.6 from 61.2. Hiring intentions also remained positive, with 53 per cent of respondents expecting to increase their workforce in Q2FY27 and only 8.4 per cent expecting a reduction. The survey was conducted between July 23 and August 24, 2026, and covered 238 firms across manufacturing, services and other sectors. (ANI)
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