India's capital expenditure momentum stalled sharply in the final quarter of fiscal 2026, with new project announcements dropping 13 percent to 44 trillion rupees. The collapse was particularly severe in March, when both public and private capex announcements plummeted over 50 percent year-on-year. Government-led capex fell 58 percent after surging 54 percent previously, while private investment remained largely flat. Geopolitical tensions from the West Asia war, combined with tariff uncertainty, prompted companies to defer expansion plans. The electricity sector suffered the worst hit with a 47 percent decline, followed by construction and real estate down 33 percent. Manufacturing showed relative resilience with an 8.8 percent decline.
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