March collapse reverses India Inc.’s capex momentum

war in West Asia rocked global sentiment.Fresh project announcements slipped 13% to ₹44 trillion in the financial year 2025-26 (FY26), according to data from the Centre for Monitoring Indian Economy (CMIE). It almost erased 16% growth seen in the previous fiscal.The slowdown was primarily driven by a 58% collapse in the government-led capex announcements, which had jumped 54% in the previous year.

In contrast, private investment intentions fell 0.9%, following a rise of 4.3% and 1.2% in the previous two years. This reversal unfolded amid heightened geopolitical turbulence.“Tariff uncertainty through the first half and a war-led spike in the final quarter prompted companies to defer fresh capex announcements,” said Madan Sabnavis, chief economist at Bank of Baroda.

A normalization effect is also at play, as the surge in FY25 investments has triggered both a statistical dip and a natural pause in expansion, said Sabnavis.The final quarter, and March in particular, derailed the full-year performance. During this period, both public and private capex announcements plummeted by more than 50% year-on-year.Aside from a slight softening during July- September period, the year’s weakness was overwhelmingly concentrated in the final months.

In fact, this is the second time in the post-pandemic era that a final quarter has seen a year-on-year contraction, according to CMIE data.The private capex cycle was beginning to show early signs of a turnaround, but the outbreak of the West Asia war in March has clouded the outlook and pushed back any broad-based investment revival, said Debopam Chaudhuri, chief economist at Piramal Finance.The dull capex mood was visible across sectors. The electricity sector turned out to be the worst-hit