Investment plans heavy on infra, consumer sector lags

MUMBAI: Electricity, chemicals and metals accounted for 60% of the proposed investments in terms of sectors while in terms of geography, Andhra Pradesh, Odisha and Maharashtra account for half of the total investments proposed in the country in the first nine months of FY26.

According to a Bank of Baroda Economic Research note, new investment announcements between April and Dec aggregated Rs 26.62 lakh crore, exceeding the Rs 23.88 lakh crore of expected investments recorded in the corresponding period in 2024. The report said there were “clear signs of a pick-up in investment intentions in the country this year,” aided by a supportive policy environment and easing financial conditions.

Nearly 48% of announced investments originated from infrastructure-oriented industries, while chemicals accounted for another 22%. In contrast, consumer-oriented industries accounted for less than 3% of total announcements. “Investment has been predominantly in the capital goods industries with the front end being provided by infrastructure,” the note said, while adding that a sustained recovery in consumption could eventually broaden the investment base.

Electricity emerged as the single-largest sector, accounting for 22.6% of total investment announcements, marginally ahead of chemicals and chemical products at 21.8%, and metals and metal products at 17.3%. Information technology and transport services completed the top five, together taking the cumulative share of these sectors to around 80% of total announced investments. The report noted that “power is the dominant sector with renewables leading the pack,” adding that this was “an effective indicator of how seriously the economy is looking at environment issues.”

A state-wise break-up showed a sharp concentration of proposed investments in a handful of regions. Andhra Pradesh alone accounted for 25.3% of total investment intentions during the period, followed by Odisha at 13.1% and Maharashtra at 12.8%. Telangana and Gujarat contributed 9.5% and 7.1%, respectively, taking the combined share of the top five states to around 68%.

Over time, as investment becomes more broad-based, “the present skew towards infrastructure will reduce,” and investment activity could spread more evenly across states, the report noted.