Growth of Project Investments in India

Economic and Investment Insights: RBI Study Summary

• Overall Project Sanctioning:

  • In the fiscal year 2025-26, banks and financial institutions sanctioned projects totaling Rs 4.4 lakh crore, up from Rs 3.7 lakh crore in 2024-25, indicating a 19% increase.
  • Maharashtra became the largest destination, sanctioning projects worth Rs 88,880 crore (20.2%); Gujarat followed with Rs 78,760 crore (17.9%), and Rajasthan accounted for Rs 48,840 crore (11.1%).
  • The six leading states (Maharashtra, Gujarat, Rajasthan, Karnataka, Andhra Pradesh, Tamil Nadu) together reported Rs 2.96 lakh crore, comprising 67.1% of the total project costs for FY26.

• Project Distribution:

  • Significant shifts in the geographical distribution of investments were noted; Maharashtra and Rajasthan saw increased shares while Gujarat's share declined from 20.6% in FY25 to 17.9% in FY26.
  • The number of projects sanctioned rose from 907 in FY25 to 1,032 in FY26.

• Investment Sources:

  • Of the total project costs, approximately 55% (Rs 2.4 lakh crore) was financed directly by banks and financial institutions.
  • Beyond the banks' financing, 509 private non-financial companies raised about Rs 1 lakh crore through external commercial borrowings (ECBs) and 298 companies raised Rs 23,809 crore via domestic equity issuances in FY26.

• Investment Intentions:

  • A total of 1,839 projects involving Rs 5.6 lakh crore were recorded for FY26, representing increases of 16% in project numbers and 12% in investment values compared to FY25.

• Project Size Dynamics:

  • Smaller projects (less than Rs 100 crore) continued to dominate the numbers, yet larger projects (Rs 5,000 crore and above) significantly influenced the total project cost.
  • The post-Covid period showed an increase in the number of larger projects.

• Outlook:

  • The RBI forecasts a healthy investment outlook for 2026-27, suggesting that the private-sector investment cycle is anticipated to gather momentum, potentially influenced by bank financing, ECBs, and equity market activities.

• Key Takeaways:

  • Significant growth and changes in project sanctioning dynamics reflect a strengthening investment cycle in India.
  • Continuous monitoring of state-level investment trends and funding channels will be crucial to understanding the economic landscape and the trajectory of corporate investments moving forward.