Indian corporates to double capital spending soon

New Delhi

Indian companies are expected to double their capital spending to between $800 billion and $850 billion over the next five years, according to a report by S&P Global Ratings released Tuesday. Most of this investment will be funded through operating cash flows, supported by strong domestic financing options.

The report highlighted that as long as companies avoid execution mistakes or major economic setbacks, the increased spending will help businesses grow without significantly increasing their debt levels. “Corporate India is chasing growth opportunities. Balance sheets are the leanest they have been in years,” the report said.

Much of the new investment will focus on power sectors like renewables and transmission, airlines, and emerging fields such as green hydrogen. These areas could make up about 75 percent of the total capital expenditure growth during this period. Investments in airports alone may double or even triple.

Traditional sectors like steel, cement, oil and gas, telecom, and automobiles will see steadier growth of 30-40 percent. Companies have also reduced their debt in recent years, helping keep financial risks low.

Earnings and cash flow across sectors have improved significantly, with levels now 60 percent to double what they were five years ago. In the airline sector, new aircraft purchases are expected to top $100 billion.

The report also mentioned new industries such as green hydrogen, semiconductors, and battery plants will likely require significant borrowing. However, these projects are mostly led by large firms and conglomerates.