The value of new investment projects announced declined by a sharp 57% year-on-year to Rs 10.9 lakh crore in the March quarter, a sign that the war in West Asia has created a ripple effect on the economy. Worse, the private sector’s share in new projects fell to 65% during the quarter after touching an all-time high of 88.5% in the September quarter.
In the just-concluded quarter, both government and private investment announcements declined by 53% and 58%, respectively, data from the Centre for Monitoring of Indian Economy showed. To be sure, in absolute terms, the value of private projects unveiled was Rs 7.2 lakh crore in Q4FY25, a three quarter low. In contrast, government investment announced was Rs 3.8 lakh crore, a four-quarter high.
Typically, March quarter sees a spurt in declaration of investment intents. Total projects announced peaked at Rs 25.4 lakh crore in the three months to March last year (Q4FY25), driven by robust private sector project announcements of Rs 17.2 lakh crore, the highest ever. However, at Rs 10.9 lakh crore in March this year, total project intent was the lowest since March 2021 when it was Rs 5.3 lakh crore. In the preceding March-quarters, it was Rs 18.4 lakh crore in Q4FY24 and Rs 18.8 lakh crore in Q4FY23.
Services Surge
The share of the manufacturing sector in the total new investment projects announced in the March quarter was just 15.8%, or Rs 1.7 lakh crore, the lowest since March 2023. It was highest at 67% or Rs 6.6 lakh crore in September 2025 quarter. The share of the services sector (excluding financial) was 68% (Rs 7.5 lakh crore) in the quarter, the highest ever since the agency began tracking the data.
Geopolitical Tensions
Madan Sabnavis, chief economist at Bank of Baroda, says investment decisions have been affected by the extremely uncertain environment relating to tariffs. “This is what has kept private investment cautious even after the GST cuts. The government too kept an eye on the fiscal ratios and hence fine-tuned expenditure,” he says.
Private sector investment depends on both capacity utilisation rates and demand conditions. Capacity utilisation rose marginally to 74.3% in Q2FY26 compared with 74.1% in Q1FY26, data from RBI’s Order Books, Inventories, and Capacity Utilisation Survey show. However, it was lower than the 77.7% reported in Q4FY25, which was a 48-quarter high.
Gaura Sen Gupta, chief economist at IDFC FIRST Bank, says the sharp reduction in projects announced by the private sector in Q4FY26 is unusual as capacity utilisation rates have picked up. “The West Asia crisis that occurred in March could have impacted sentiment, delaying further announcements,” she says.
Projects completed in the quarter ending March totaled Rs 2.8 lakh crore. Typically, March-ending quarters usually report higher completion of projects. In March last year too, projects worth Rs 2.8 lakh crore were completed, higher than the average Rs 2.6 lakh crore commissioned in the preceding four March-quarters.