Indian companies are gearing up for a major investment push, with capital spending expected to double to $800 billion-$850 billion over the next five years, according to a new S&P Global Ratings report. Driven by strong operating cash flows and favorable domestic funding conditions, this surge in capex is poised to fuel growth without significantly increasing debt levels. The report highlights that companies are in a solid financial position, with lean balance sheets and a positive economic outlook backing their expansion plans.
Key sectors leading this spending boom include power (especially renewables), airlines, and emerging fields like green hydrogen. Together, these areas are projected to make up about 75% of the total capex increase. Meanwhile, traditional industries such as steel, cement, and oil and gas are expected to grow at a steadier 30-40% pace. Notably, investments in airports could double or even triple during this period, reflecting the growing demand for infrastructure upgrades.
Healthy financials will play a crucial role in keeping debt levels manageable. Many firms have significantly reduced leverage over recent years, and with earnings and cash flows already 60% higher than five years ago, they’re well-positioned to fund these ambitious projects. Even debt-heavy sectors like airlines—where new aircraft investments may top $100 billion—are expected to stay resilient due to strong underlying demand. Emerging sectors like green hydrogen and semiconductors will also attract substantial funding, though largely driven by major corporate players. This wave of investment could reshape India’s industrial landscape, driving long-term growth and efficiency.