S&P Global said corporate capex is unlikely to jump this fiscal, but private companies may invest USD 800–850 billion over the next five years.
Private investment growth is trailing nominal GDP due to global trade uncertainties, prompting companies to rely more on internal funds than bank loans.
Banking sector credit growth is expected to accelerate to 12–13% in FY26, while the private credit market, though small, is growing rapidly with deals over USD 1 billion.
While a jump in capital expenditure is unlikely this fiscal year, the prospects for the economic growth catalyst are much better over a medium-to-long term, an arm of global rating agency S&P said on Wednesday.
Companies are likely to invest upward of USD 800 billion over the next five years, S&P Global said.
"There is still a degree of caution that we are seeing in terms of large private capacity addition. We do think that it will come over a period of time," its sector lead for financial institutions ratings in South and Southeast Asia, Geeta Chugh told reporters here.
"We are, as a house, projecting USD 800-850 billion of private capex in the next five years. I don't see it happening this year. I think it will probably get shifted to next year," she added.
DK Joshi, the chief economist at Crisil, the local arm of the global agency, said the private investments are happening, but their rate of growth is trailing the nominal GDP and added that it is not "fast enough".
He said there is too much uncertainty given the changes in global trade policies and tariffs, among others, due to which corporate companies are delaying their investment decisions.
Chugh said many corporates are preferring to invest from their own internal resources rather than going to banks for resources, and a very small amount of money is raised from debt capital markets or bank loans.
She said the arm expects the banking sector's credit growth to accelerate to 12-13% this fiscal on the back of a pick-up in the second half.
Banks are cautious to take credit risks, and additionally, there are alternatives like the private credit market, due to which the reliance on banks for credit has decreased.
The private credit market, though very small at 1% of GDP in larger schemes, is growing very fast, and the first six months of 2025 have witnessed deals equal to the whole of 2024, Chugh noted.
Regulatory restrictions on real estate financing and acquisition finance prompt entities to access the private credit market, she said, adding that deals of over USD 1 billion are also happening in it.
Sticking to the 6.5% real GDP growth estimate for FY26, Joshi said the impact of the monsoon and uncertain macros, including sluggish private capex growth, are the risk factors to the projection.
Pooja Kumar, the head of country risk in Asia Pacific, said the growth in manufacturing has trailed the overall credit growth for the last three years, and added that lenders are preferring lending to the services sector.
Reversing this trend will be essential if the country were to achieve its ambitions of increasing manufacturing activities' share in the GDP to 25 per cent from the present 17 per cent, she added.
As of mid-2025, 28% of the loans to businesses were to services sector enterprises, while the same for manufacturing was 21%, Kumar added.
S&P Global Commodity Insights' executive director for global energy transition, Gauri Jauhar, said the liability laws are restricting nuclear energy investments and added that even with the thrust on opening up, the entity expects 80% of the capacity to be dominated by state-owned companies.
