The prospects for private capital expenditure in India show strengthening, however, the factors leading to difficulties in projects are changing. Currently, the main reasons for problems are market conditions and promoter interests.
Recent announcements of new projects have significantly increased. Previously, the Reserve Bank of India (RBI) predicted that private sector capital expenditure would amount to 3.2 trillion rupees in the fiscal year 2027, which is higher than the figure of 2.6 trillion rupees in the fiscal year 2026. Meanwhile, management-related issues, such as land acquisition and obtaining permits, accounted for only 20 percent of problematic projects in fiscal year 2026, compared to 60 percent in fiscal year 2014. In fiscal year 2026, almost 72 percent of problematic projects were due to adverse market conditions and promoter interests.
These findings are based on an analysis conducted by the National Institute of Public Finance and Policy (NIPFP) within an analytical note covering private sector projects from fiscal year 2014 to 2026. The study showed that the number of new project announcements increased from 4 trillion rupees in fiscal year 2014 to 35 trillion rupees in fiscal year 2026.
Expansion of the private project portfolio
The NIPFP analysis demonstrated an increase in the number of new private sector project announcements from 4 trillion rupees in fiscal year 2014 to 35 trillion rupees in fiscal year 2026. The total value of all announced new projects more than doubled: it grew from approximately 56 trillion rupees in the period from fiscal year 2021 to 2023 to 104 trillion rupees in the period from fiscal year 2024 to 2026.
Meanwhile, the share of problematic projects has decreased. Their share of the total unfinished projects reduced from a peak of 4 percent in fiscal year 2014 to less than 0.1 percent in fiscal year 2026. In monetary terms, problematic projects decreased from a peak of 3.3 trillion rupees in fiscal year 2014 to 14,000 crore by the end of fiscal year 2026.
NIPFP defines problematic projects as those classified as 'suspended' or 'abandoned'. A suspended project is one withdrawn before implementation begins and can be resumed later, while an abandoned project is one withdrawn during implementation with no indication of resumption.
The RBI also reported an increase in the private capital expenditure portfolio. In its September bulletin, the central bank estimated private sector capital expenditure at 3.2 trillion rupees for fiscal year 2027, compared to 2.6 trillion rupees in fiscal year 2026. The total project value reached a record 4.4 trillion rupees in fiscal year 2026, higher than the figure of 3.7 trillion rupees in fiscal year 2025. The central bank noted that 'the investment outlook is expected to remain healthy in the long run, although increased global uncertainty is likely to temper investment sentiment.'
Reasons for project problems
The NIPFP analysis showed that the nature of project problems has changed over the last decade. In fiscal year 2014, management-related issues, such as land acquisition, environmental permits, and supply of fuel or raw materials, accounted for 60 percent of problematic projects. This share decreased to 20 percent by fiscal year 2026.
Simultaneously, NIPFP attributed 80 percent of problematic projects in fiscal year 2026 to the category of 'Other problems', which includes financing constraints, market and economic conditions, as well as operational difficulties. Within this category, adverse market conditions and lack of promoter interest were the main factors over the last three years. Together, they accounted for almost 72 percent of problematic projects in fiscal year 2026.
NIPFP indicated that previously, management issues affected private investment through delays related to land acquisition, regulatory permits, and fuel supplies. It linked the reduction of such problems to the acceleration of environmental and legislative approvals, single-window approval systems, land acquisition measures, reforms in the coal sector, and the Insolvency and Bankruptcy Code.
Where private investments are going
NIPFP found that the private investment portfolio is becoming more concentrated in developing sectors. The share of private investments directed towards renewable energy, traditional energy, and ITES increased from approximately 25 percent in the period from fiscal year 2021 to 2023 to 38 percent in the period from fiscal year 2024 to 2026. At the same time, traditional industries such as transport services, two- and three-wheelers, and tourism showed a decline in their share.
In the power, ITES/data center, other electronics, and steel sectors, about 55 percent of private investments was directed in the period from fiscal year 2024 to 2026, compared to approximately 45 percent in the period from fiscal year 2021 to 2023. NIPFP noted: 'The growth of artificial intelligence and cloud computing increases the demand for data centers, electricity, semiconductors, and digital infrastructure. Supply chain diversification also supports electronics and chip manufacturing.'
The institute also stated that the energy transition opens up opportunities in areas such as biofuels, compressed biogas, and coal gasification. Government support includes schemes such as the production-linked incentive scheme, the IndiaAI mission, and the Semicon India program.
Credit is also moving towards investments
Bank lending data indicates an increase in financing activity. According to NIPFP, the increase in industrial bank credit reached 6 lakh crore in fiscal year 2026, which is the highest expansion in the period from fiscal year 2014 to 2026. The institute added that 'base metals, machinery, chemical industry, textiles, and food processing provided about 56 percent of the credit growth in the non-infrastructure sector in the period from fiscal year 2024 to 2026.'
Infrastructure lending reached an eight-year high of 1.2 trillion rupees, largely driven by the energy sector. NIPFP reported that the growth in infrastructure lending exceeded its previous level by more than 3.3 times, while the non-infrastructure sector showed a growth of 1.8 times in fiscal year 2026.
New risk for private capital expenditure
The reduction in internal management constraints does not eliminate project risks. NIPFP emphasized that current risks are increasingly related to market conditions, geopolitical events, input costs, and supply chains. The institute noted: 'The conflict in West Asia led to a 56 percent year-on-year drop in private investment announcements in March 2026.'
The report also contains a warning that the increase in investment announcements does not necessarily translate into completed projects. The study states: 'If a project is not commissioned and production has not started, the risk of suspension or write-off remains.'