India’s capex upcycle that began last year is seen as persisting with state governments and companies joining the Centre to invest in a multitude of sectors ranging from pure infrastructure to data centres and electronics.

Analysts are of the view that the capex cycle is here to stay because of positive factors such as a fall in input prices, a resilient economy and interest rates stabilising with the Reserve Bank of India (RBI) likely to go into an extended pause at least till the first three months of the next calendar year.

Besides, corporate debt is lower, giving the companies the room to use internal cash and debt to undertake new plans.

They said the production-linked incentive (PLI) plan has also played a positive role in pushing up investments.

The scheme, which began in 2020 with three sectors, is available for 14 manufacturing sectors and reports indicate that actual investment of over Rs 62,000 crore has been seen till March 31, 2023.

Analysts at ICICI Securities said in a recent note that corporates are now moving beyond maintenance capex to discretionary capex.

According to the brokerage, corporate capex in the listed companies was robust at an all-time high of Rs 7.6 lakh crore (trillion) in 2022-23 against Rs 6.3 trillion in the preceding fiscal year driven by capital-intensive industrial corporates.

It estimates that the listed-space corporate capex could likely reach Rs 8.5 trillion in this fiscal assuming it keeps pace with nominal GDP growth driven by investments in energy, power, metals, infrastructure, industrials, auto and retail.

An encouraging element on the capex front is that state governments are now joining the cycle after lagging behind in 2022-23.

The analysts at ICICI Securities estimate it to grow to Rs 8.4 trillion in this financial year based on state budget estimates. It says that even if there is a slippage of 10 per cent, their capex could still reach Rs 7.6 trillion.