Corporate Capex Hits ₹11 Lakh Crore, Surpassing Government Spend; Reliance at the Forefront

India’s corporate sector has demonstrated an impressive surge in capital expenditure (capex), surpassing the government’s own spending for FY25. According to a report by ICICI Securities, corporate capex by listed non-financial companies rose by 20% YoY to exceed ₹11 lakh crore, outpacing the central government’s  ₹10.5 lakh crore outlay. This rise in corporate capex reflects a broad-based growth across multiple sectors and signals a positive trend in the nation’s economic recovery.

Corporate Capex Growth Outpaces Government Spending

The corporate capex surge in FY25 has surpassed the central government’s expenditure, highlighting the strong financial position of India’s listed non-financial companies. According to the report, this 20% YoY increase in corporate capex signals a healthy environment for investment and growth.

Interestingly, while Reliance Industries Ltd (RIL) led in scale despite a flat growth year-on-year, the broader growth was more diversified. RIL, typically a major contributor in capex spending, witnessed muted growth in its telecom and related sectors, but still remains a key player in India’s overall capex dynamics.

Key Sectors Driving Corporate Capex Growth

Report highlights that the broad-based nature of capex growth in FY25 sets it apart from previous years. The major sectors contributing to this capex surge include:

• Utilities
   
• Energy (excluding RIL)
   
• Industrials
   
• Cement
   
• Automobile
   
• Healthcare

This diversification shows that corporate capex is not concentrated in any one sector, which reflects an overall confidence in India’s growth trajectory across a range of industries.

Corporate Sector’s Role in the Capex Cycle

One of the key features of FY25’s corporate capex spending pattern was the 157 corporates committing to capex of over $100 million, marking the highest number since 2013. This widespread commitment is a sign that businesses are ready to invest for growth, even as the global environment remains uncertain.

This broader participation is significant, considering that at the peak of the capex cycle in 2012, 175 listed companies had committed to capex of at least $100 million. The rise in capex-to-depreciation ratios, now around 2x, suggests that companies are focusing on discretionary capex rather than simply replacing depreciated assets.

Cash Flow and Credit Growth Trends

Despite the significant rise in capex, credit growth remains sluggish, largely due to the strong cash flow from operations (CFO) generated by listed companies. In FY25, companies reported over  ₹16 trillion in CFO. However, the CFO-to-capex ratio declined to 1.5x, indicating that capex growth is now outpacing cash generation, which could lead to a rise in corporate loan demand moving forward.

As capex continues to grow, it may put additional pressure on companies to seek financing, especially in the context of a fiscal deficit reduction and easing monetary policy conditions, which should provide further support for the capital expenditure cycle.

Read More: India Inc’s Capex Set to Touch ₹72,72,600 crore Over Next 5 Years! 

Policy Support Driving Corporate Capex Momentum

The government’s fiscal policy appears conducive to further capex growth. ICICI Securities notes that the fiscal deficit is expected to ease to 4.4% of GDP, which will reduce pressure on credit markets and create room for private sector funding.

Additionally, the monetary policy has remained growth-oriented since December 2024. 50 basis points in CRR cuts have already been implemented, with another 100 basis points expected. These measures, along with repo rate cuts, are designed to stimulate investment and make capital more accessible for businesses.

Global Supply Chain Shifts and India’s Strategic Position

While global uncertainties such as geopolitical tensions remain, there are indications that India could benefit from the shifting global supply chains away from China. As businesses around the world diversify their supply chain sources, India stands to gain as an increasingly attractive destination for investment, particularly in sectors like manufacturing, automobile, and electronics.

Conclusion

The impressive growth in corporate capex by listed non-financial companies in FY25, surpassing the government’s spending, signals a positive trend in India’s economic landscape. The broad-based nature of this growth, coupled with strategic policy support, is setting the stage for continued expansion across multiple sectors. However, as capex growth outpaces cash generation, companies may increasingly turn to credit markets to fund their investments, potentially leading to a rise in corporate loan demand.

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