Every few months someone announces that India’s private capex cycle has finally arrived. The RBI’s September Bulletin gives us fresh data to test that claim. My reading is that the picture is good, but not as good as the headline suggests, and not as bad as a quick look at the pipeline numbers can make it seem.
The good part first
In FY26, banks and financial institutions sanctioned loans to 1,032 private projects with a total project cost of Rs4.35trn. A year ago, it was 907 projects worth Rs3.68trn, an increase of about 18%. This is the highest figure in the RBI series, which goes back to FY14. If we add capex funded through ECBs and equity issues, private corporates showed investment intentions of Rs5.6trn across 1,839 projects, against Rs5.0trn across 1,581 projects in FY25.
The quality looks decent too. About 89% of the project cost is for greenfield projects, which means new capacity and not just replacement, though this share is in line with earlier years. Corporate and bank balance sheets are in good shape. Term loans grew 15.4% in June 2026 against 8.3% a year ago, and gross fixed capital formation grew 20.4% at current prices in April-June 2026. There is nothing here to be gloomy about.
But a sanction is not spending
Three things make me cautious before calling this a broad-based capex boom.
First, sanction and spending are different things. The Rs4.35trn is project cost, and banks and FIs financed only about 55% of it. The money will be spent over three or four years, and the RBI itself says these are ex-ante plans which can change. Actual capex in FY26 grew only about 10%, and the sanctions were around 3% of outstanding bank credit to industry. The RBI’s own model says a 1% rise in envisaged investment adds about 0.33% to private capital formation in the long run. It is a useful signal, but not a very strong one.
Second, concentration. Power has held close to 40% of sanctions for two years running. Roads and bridges, which took a quarter of all sanctions in FY24, fell below 9% in FY25 and stayed there. Construction has picked up, while chemicals slipped back after a good FY25.
The size of tickets tells the same story. The 112 projects above Rs1,000 crore made up about 68% of the total cost, while 597 projects below Rs100 crore, more than half the count, made up just 5%. Six states took 67% of the money, led by Maharashtra (20.2%) and Gujarat (17.9%). A lasting capex cycle needs the middle of the pyramid to move too, across manufacturing, logistics and services, because that is where jobs and the multiplier come from. The data does not show that yet.
Third, the credit story. A good part of the recent pick-up in corporate credit looks like working capital. Companies have been drawing down credit lines to stock inventories and hold liquidity because of the West Asia uncertainty. That is not capex, and it can reverse as quickly as it came.
How to read the pipeline
The most interesting part is the phasing of capex, that is, how much of the sanctioned money is expected to be spent in which year. Here one needs some care. Capex planned across all channels is Rs4.73trn for FY26 and Rs3.24trn for FY27. It is tempting to say that the pipeline has shrunk by 31%. That is not a fair comparison. The FY26 figure includes projects sanctioned during FY26 itself, while the FY27 figure cannot include projects that will be sanctioned during FY27, because they do not exist yet. To compare like with like, we should remove the same-year sanctions from FY26 and compare pipeline with pipeline.
On this basis the FY27 pipeline is about a quarter higher than the comparable FY26 pipeline. The RBI puts it at Rs3.2trn against Rs2.6trn. Bank-funded capex is up 15% and ECB-linked capex has almost doubled. The soft spot is equity. Capex funded through IPOs, follow-ons and rights issues is down 18%, and the capex envisaged from IPO money fell to Rs238.09bn in FY26 from Rs322.95bn in FY25. It is a small channel, about 3% of the FY27 pipeline, but it is where market mood shows first.
What about the Rs1.51trn shown for the period beyond FY27? It looks thin, but it is a bucket for all years after FY27, and it is naturally small today because the sanctions of FY27, FY28 and later have not happened. Even the FY26 sanctions have 22% of their cost parked beyond FY27. I would not read a slowdown into that number.
So where is the real risk? By my rough arithmetic, bank and FI projects spend about 35% of their cost in the year of sanction. The FY27 bank-funded capex already visible is Rs2.26trn. If FY27 sanctions stay flat at Rs4.35trn, bank-funded capex in FY27 would come to about Rs3.8trn, roughly 8% above FY26’s Rs3.52trn. For it to merely stay flat, sanctions would need to fall by nearly a fifth, to around Rs3.6trn. So, the engine is not stuttering. The risk is a sharp fall in fresh sanctions, or delays in executing projects that are already sanctioned. That is what I will be watching.
What I will watch
· Fresh sanctions. Around Rs3.6trn is the level below which FY27 bank-funded capex starts to slip. Anything lower will need explaining.
· Breadth. Whether manufacturing, construction, chemicals and roads add to power, or power remains the whole story.
· Credit mix. Term loans for projects versus working capital lines. The first builds capacity, the second only builds inventory.
· The equity route. A recovery in IPO-funded capex would be a good sign of business confidence.
· Execution. These are plans on paper. Delays and cancellations will show up only with a lag.
For investors: in my view, the order books linked to power and infrastructure have the best visibility today. I would not pay for a broad-based private capex boom until fresh sanctions confirm it. As for banks, near-term corporate loan growth is more about working capital than capex, so I would not build a thesis on it alone.