Private capex takes centre stage as India’s new project pipeline jumps 28%: HSBC

New business data points to the fact that India’s capex cycle is beginning to see a stronger private-sector contribution, with private firms accounting for 90 percent of new project announcements in the first quarter of FY27, according to HSBC Securities and Capital Markets.

New project announcements rose 28 percent year-on-year to Rs 14.6 trillion in the quarter. Around 80 percent of the announced investment was fuelled by nuclear projects and data centres, while around 80 percent of the new project announcements were in Maharashtra, HSBC stated in a September 23 report.

The shift comes as government spending stays firm. But project execution data is more mixed. Projects under implementation grew only 5 percent year-on-year to around Rs 204 trillion in the quarter. Project completions declined 17 percent, while shelved projects jumped around 600 percent, mainly because of large railway projects being put on hold.

Private sector takes a larger role

The private sector accounted for 90 percent of new project announcements in FY27 Q1, compared with a much smaller contribution from the government, HSBC stated.

The top 10 projects accounted for around 80 percent of the investment in new projects. Nuclear and data centres together contributed around 80 percent of the new-announcement value.

The concentration additionally has a geographical element. Around 80 percent of new project announcements were in Maharashtra.

The new announcements additionally include private investment in areas such as data centres and nuclear-related infrastructure.

At the same time, HSBC cautioned that the size of the announced pipeline should be read alongside execution trends.

Projects under implementation grew 5 percent year-on-year to around Rs204 trillion. Project completions declined 17 percent. Shelved projects increased around 600 percent year-on-year, primarily because of the shelving of three large railway projects: the Rs 63,900 crore Thiruvananthapuram-Kasargod Semi High-Speed Rail Project, the Rs 22,800 crore Jammu-Akhnoor-Rajouri-Poonch Railway Project and the Rs 16,000 crore Pune-Nashik Semi High-Speed Broad Gauge Rail Line Project. Government capex stays firm

The government keeps provide the base for the investment cycle.

Central government capex grew 30 percent year-on-year in the fiscal year to July 2026. Spending was broad-based across key segments, with defence capex up 41 percent, roads up 41 percent and railways up 28 percent.

The Centre had achieved 37 percent of its full-year capex target by July, compared with 32 percent in the same period a year earlier.

Defence spending rose 41 percent and touched 26 percent of its full-year budget allocation, against 22 percent a year earlier. Railway capex grew 28 percent, while the railway ministry had achieved 43 percent of its budget allocation by July against 37 percent in the previous year.

Road capex additionally grew 41 percent year-on-year in the fiscal year to July. The government had achieved 30 percent of its full-year road capex target, against 29 percent a year earlier.

Public-sector undertaking capex expansion was slower at around 5 percent in the fiscal year to August. That stated, budget utilisation improved to 40 percent from 36 percent a year earlier. PSU capex allocation for FY27 was 13 percent elevated year-on-year.

State government capex additionally picked up. It grew 10 percent year-on-year in the fiscal year to July, with Maharashtra, Kerala and Chhattisgarh among the stronger spenders. West Bengal, Bihar and Haryana lagged.

36 government projects enter execution

The government further noted 36 new projects worth Rs 1.11 trillion to the execution phase in July, according to data cited by HSBC.

The larger projects included the BharatNet programme at around Rs 45,400 crore, the Meja thermal power project at around Rs 38,400 crore and the Jaipur Metro project at around Rs 13,000 crore.

The broader infrastructure pipeline stays large. More than 1,700 infrastructure projects were under implementation, with a combined estimated cost of around Rs 37 trillion as of July.

That stated, the projects had additionally accumulated a cost overrun of around Rs3.4 trillion over their original estimated cost. Transport and logistics accounted for around 53 percent of total project costs, followed by energy.

Among the projects further noted in July were several manufacturing clusters, multiple BharatNet projects, Jaipur Metro Phase II, the Meja thermal power project and projects at SAIL’s steel plants.

The Meja project, being developed by NTPC, involves three 800 MW units and has an estimated cost of Rs38,400 crore. Jaipur Metro Phase II has an estimated cost of Rs13,000 crore.

Power and transmission investment stays firm

Power infrastructure keeps be another major part of the capex cycle.

India further noted 58 GW of net power capacity in FY26, of which 51 GW came from renewable capacity. In FY27 so far, capacity additions stood at 22 GW, including 20.2 GW of renewable capacity, 0.9 GW of thermal capacity and 0.7 GW of hydro capacity.

Renewable capacity touched around 223 GW in FY26 and stood at around 243 GW as of August 2026.

In August alone, around 4.6 GW of gross capacity was further noted, including 3.4 GW of solar, 0.4 GW of wind and 0.8 GW of thermal capacity. Net additions were softer at 2.5 GW because 0.4 GW of thermal capacity was retired and 1.6 GW was temporarily removed.

Transmission investment has additionally accelerated. According to the Central Electricity Authority, 4,301 circuit kilometres of transmission lines were further noted in the fiscal year to July, up 115 percent year-on-year. Interstate transmission system additions were four times the previous year, with Power Grid accounting for around 80 percent of ISTS additions.

HSBC stated the electrical equipment industry grew around 18.5 percent in the fourth quarter of FY26, helped by increased renewable capacity commissioning and the need to upgrade transmission infrastructure.

Power transformers, cables, insulators and conductors were among the fastest-growing product segments.

Refinery, steel and cement capex stays in the pipeline

HSBC additionally pointed to continued capacity expansion in traditional industrial sectors.

India’s refinery capacity is anticipated to climb to 303 million tonnes by 2030 from 258 million tonnes in FY25. HSBC stated refinery capex is still being undertaken and is anticipated to be commissioned over the next three to five years.

BPCL has guided for Rs25,000 crore of capex in FY27, up 23 percent year-on-year.

Steel capacity is anticipated to climb at around 5 percent CAGR between FY25 and FY30, according to HSBC estimates. The bank anticipates more steel projects to be ordered over the next two years, although these are likely to be commissioned beyond 2030.

Cement capacity is additionally anticipated to grow at around 5 percent CAGR between FY25 and FY30.

Investment activity reveals resilience, but macro signals are softer

Gross set capital formation grew around 12 percent year-on-year, its fastest pace in 13 quarters, supported by government capex. The GFCF-to-GDP ratio stood at 34.3 percent.

Manufacturing value addition grew 9.2 percent year-on-year, supported by electrical equipment, transport equipment, electronics and machinery.

Industrial production expansion, that stated, eased sequentially to 6.7 percent in July from 8.8 percent in June. Manufacturing and electricity led expansion. Capital goods output continued to grow at around 16 percent, while infrastructure goods output rose 6.9 percent.

Within manufacturing, electrical equipment output grew around 28 percent, motor vehicles and trailers around 22 percent, and machinery and equipment around 12 percent.

Core-sector expansion additionally moderated. It eased to around 5 percent year-on-year in August, led by cement, electricity and iron ore. Fertilisers, natural gas, oil and coal declined during the month.

India’s manufacturing PMI declined to 52.8 in August from 53.5 in July, with softer expansion in output and new orders. The composite PMI was steadier at 54.3 as services offset the manufacturing slowdown.

HSBC as a result anticipates the capex cycle to stay sustained by government spending, but stated the pace of improvement could moderate. The bank stated softer PMI and core-sector indicators warrant selectivity.

Middle East orders stay a watchpoint for EPC firms

For Indian engineering, procurement and construction firms, the Middle East stays an important overseas market.

Contract awards in the region stabilised in July but remained below pre-war marks, HSBC stated, citing MEED data.

Contracts worth $20.4 billion were awarded in July, down from $26.2 billion in June and $40.7 billion in July 2025.

The UAE accounted for the largest share, with $10.9 billion of awards. This included a $6.2 billion Umm Sharif Gas Cap and surface pressure boosting project by ADNOC.

Egypt recorded $6.6 billion of awards, led by the $5.6 billion Cairo Metro Line 4 Phase 2 project.

Transport and gas were the leading sectors for July awards.

Fresh investment announcements point to a wider capex base

The report additionally listed several investment announcements made in September.

The Cabinet Committee on Economic Affairs approved five multi-tracking railway projects across Tamil Nadu, Andhra Pradesh, Karnataka and Telangana. The projects cover 17 districts and add around 540 km to the railway network. Their combined estimated cost is Rs10,020 crore, with completion targeted for 2029-30.

Another three multi-tracking projects across West Bengal, Jharkhand, Odisha, Madhya Pradesh and Chhattisgarh will cover 14 districts and add around 656 km to the railway network. Their estimated cost is Rs10,780 crore, with completion targeted for 2029-30.

Indian Oil Corporation plans to invest Rs2,450 crore in the 424.5-km Kochi-Kanyakumari-Thoothukudi natural gas pipeline. The pipeline will have capacity of 6.84 million standard cubic metres a day, including common-carrier capacity of at least 1.71 mmscmd.

Oil India plans to spend Rs15,000 crore on deepwater exploration over the next three years across the Andaman, Krishna-Godavari, Mahanadi and Kerala-Konkan sedimentary basins. The firm plans to accelerate exploration with government backing under the Samudra Manthan initiative.

Luminous Power plans to invest Rs2,000 crore over five years in solar manufacturing and energy storage.

HEG Advanced Materials plans Rs 5,500 crore of capex to expand anode-material capacity from 20,000 tonnes to 60,000 tonnes by FY32. The investment will additionally backing its battery energy solutions and green-power businesses. The capex is anticipated to be funded through around Rs 4,000 crore of debt and Rs 1,500 crore of equity.

Garden Reach Shipbuilders and Engineers has approved Rs2,900 crore for a greenfield shipyard at Raichak in West Bengal. The project is aimed at expanding shipbuilding capacity across naval and commercial segments. What HSBC sees for the market

HSBC stated it stays constructive on firms exposed to domestic capex, citing sustained government spending, improved state capex and continued execution across roads, railways and power.

The bank identified manufacturing, renewables, power transmission and distribution, and data centres as structural themes within the capex cycle.

That stated, it additionally anticipates a gradual moderation in the broader capex cycle as economic indicators soften.

HSBC stated it favours firms with firm domestic order books, proven execution capabilities and limited exposure to input-cost and foreign-exchange volatility.