Intro
India’s capital goods sector is projected to grow 12–14% this fiscal, driven by strong government and infrastructure-led investment demand.
New Delhi
India’s capital goods industry is expected to record revenue growth of 12–14 per cent in the current fiscal year, driven by sustained government capital expenditure, capacity expansion across key sectors, and rising demand from emerging industries, according to a report by Crisil.
The report highlights strong investment momentum in sectors such as power, mining, oil and gas, metals, automobiles, and rapidly growing segments like data centres and electric vehicle infrastructure. These drivers are expected to support robust demand for heavy engineering and industrial equipment.
It notes that ongoing geopolitical developments in West Asia are unlikely to significantly impact the sector, as most companies have diversified order books and limited exposure to the region. The majority of revenues continue to come from the domestic market, providing stability to earnings.
Operating margins are projected to remain steady in the range of 12–13 per cent, supported by strong execution capabilities, long-term client relationships, and improved operational efficiency, despite potential input cost pressures.
Order books of major capital goods companies have risen significantly, reaching around ₹5.2 lakh crore as of December 2025. The book-to-bill ratio has also improved to 3.7 times in FY26, compared to 3.1 times in FY24, indicating strong future revenue visibility.
The growth is largely driven by increased public investment in the power sector, which now accounts for nearly 50 per cent of total capital goods demand, up from 32 per cent earlier. Defence and railway sectors are also contributing significantly to order inflows.
According to Crisil, power capacity additions of 58–62 GW, led by renewable energy projects, are expected to further boost demand. Transmission infrastructure expansion and grid modernisation are also supporting industry growth.
Railway modernisation, rising defence procurement with emphasis on indigenisation, and steady private sector investments in steel, cement, and oil and gas are expected to sustain momentum. Emerging sectors such as EV infrastructure and data centres are adding new avenues of growth for the industry.
