The economy’s two primary growth engines–consumption and investment–are moving at divergent speeds. While gained traction – rising 7.1% in the June quarter against 6.8% a year ago – investment has been uneven so far this fiscal year.
At first glance, new project announcements rose 33% year-on-year (y-o-y) during the April-September (H1) period of FY27 to ₹30 trillion, following a g 46% surge in the corresponding period last fiscal year. New announcements rose 8.4% over H2 FY26, according to Centre for Monitoring Indian Economy (CMIE) data.
However, a close look at the quarterly trend reveals the lopsided nature of these announcements. New project proposals in the September quarter contracted nearly 6% y-o-y, after a stellar 69% surge in the June quarter, and dropped almost 50% sequentially.
Moreover, India’s entire private capex trajectory hinges on just two non-traditional sectors: data centres and nuclear power. They accounted for 25% of all capex proposals in September and almost 75% of all June-quarter announcements. Strip away the heavy concentration of these mega-investments, and the yearly decline in the September quarter deepens to 29%.
This reflects a broader “three-dimensional” concentration problem in India’s private capex cycle, said Apoorva Javadekar, chief economist at Shriram Group. He said investments are driven by a handful of large companies, concentrated in a few states, including Maharashtra, Gujarat, Rajasthan, Karnataka and Andhra Pradesh, and across a narrow set of sectors, notably power, data centres and semiconductors.
Key private mega-ventures announced during July- September included Adani Enterprises’ Odisha Integrated Greenfield Aluminium Project worth ₹1.1 trillion, the Naraj HyperscaleData Centre Hub Project worth ₹1.04 trillion and the Bhiv Bunder Nuclear Power Project ( ₹0.4 trillion), CMIE data showed.
Overall, projects worth ₹10.2 trillion were announced during this period, of which government projects accounted for ₹1.3 trillion, while private-sector projects totalled ₹8.8 trillion. On a yearly basis, public projects were down nearly 27%, whereas private sector announcements fell roughly 2%.
Beyond the two emerging segments of and nuclear power that have led the recent shift, traditional sectors have shown a mixed investment trend. Manufacturing, once a major contributor to capex, saw a 23.2% decline in new investments in H1 FY27 compared with the same period last year.
Javadekar noted that micro, small and medium enterprises (MSMEs), which are a key source of new manufacturing capacity, have come under pressure as higher debt servicing costs for supply chain and working capital financing have coincided with shrinking profits in the post-Covid period. This has constrained their ability to fund large capex projects through bank financing.
Meanwhile, intentions in construction and real estate plummeted 31.5%, CMIE data showed. This left other conventional segments, like mining and electricity, to cushion the broader slowdown. New project announcements across both sectors nearly doubled in H1FY27 compared to H1FY26.
Looking ahead, Javadekar expects continued US tariff uncertainty to pose a significant risk to India Inc’s export-linked capex decisions, potentially keeping new project announcements concentrated in data centres, power, and nuclear projects. Even after negotiations, India faces an 18% US tariff on exports, with the added risk of 100% tariffs on Russian purchases under the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026.
“Tariff uncertainty has not only affected capex plans within SEZs (special economic zones) but also stands to destabilize the FDI (Foreign Direct Investment) momentum for firms targeting India as an export hub,” he said.
This is the final part of a five-part series evaluating the first half of fiscal year 2027. The examined the performance of domestic markets, the at the best-performing asset classes, the covered trends in private consumption, while the assessed the primary markets.