India Inc is seeking targeted policy support in the Union Budget to revive private capital expenditure, with industry leaders calling for demand-boosting measures, fiscal incentives and regulatory clarity to translate investment intent into on-ground spending. Executives said the focus should be on sustaining growth amid tariff uncertainty and geopolitical risks, even as urban demand shows early signs of recovery and rural consumption remains resilient.
Demand Challenge
Harsh Mariwala, chairman of Marico, told Fe that the Budget could help by rationalising customs duties and improving demand conditions. “I am of the view that reforms can happen irrespective of the Budget. Having said that, as far as private sector investment is concerned, I don’t think businesses don’t want to invest. They do want to invest. But they will do so if there is demand. Hopefully, with the GST rate rationalisation in place, there are signs of a demand pick-up. Once that happens, investment will kick in,” he said.
The industry’s wish-list, submitted through the Confederation of Indian Industry, includes a 12% year-on-year increase in government capex in FY27 to Rs 12.6 lakh crore, a three-year privatisation pipeline, tax credits, faster land approvals for private investment and a national public-private partnership policy.
Nadir Godrej, chairperson of Godrej Enterprises Group, said companies are first focusing on sweating existing assets. “There is de-bottlenecking of existing capacity that is possible without investment into new capacity. Companies will be focused on this first before looking to set up new plants,” he said.
HM Bharuka, former vice-chairman and managing director of Kansai Nerolac and currently an independent director at Avenue Supermarts, which operates DMart stores, said policy support for real estate could catalyse investment. “If the government can do something for the real estate sector, like it did for the auto industry via GST cuts, it would give reason for the private sector to invest. Concessions on tax related to housing loans, for instance, would give an impetus to real estate,” he said, adding that a pickup would also spur cement and steel investments.
“All announcements that are demand inducing will help support the corporate sentiment on their capex decisions,” Ranen Banerjee, partner and economic advisory leader at PwC India, said. “Continued higher capex allocations for infrastructure projects will give an impetus to construction,” he added.
CMIE data shows that corporate investment intent has risen to an all-time high of 92.2% in the December quarter, but experts said specific cues are needed for this momentum to convert into actual spending. National Accounts data indicate that the private sector’s share in gross fixed capital formation stands at about 52-53%, compared with government-driven spending at around 64-65%.
Capacity Thresholds
Capex-heavy sectors such as cement are operating at around 70% capacity utilisation, below the overall industry level of 74-75%. Experts said utilisation needs to be 79-80% for at least three consecutive quarters for private investment to meaningfully kick off. Cement is expected to remain near 70% through FY26 and FY28 even with new additions. In contrast, JSW Steel reported 85% capacity utilisation for its Indian operations in Q3 FY26, rising to 93% excluding a blast furnace under upgrade at Vijayanagar.
Raju Kumar, tax partner at EY India, said corporates want multi-year demand visibility and predictable enforcement. “With global capital becoming more selective and supply chains realigning, consistency in manufacturing incentives, energy-transition pathways and logistics planning will be key to improving the risk-return equation,” he said.
Estimates by Crisil suggest FY26 will see continued sluggish private investment due to tariff-related uncertainty and global volatility. Icra expects private capex to remain measured in FY26 despite steady revenue and margin growth in the December quarter, supported by rural demand and benign commodity prices.