Investment Plans Surge, According to CII Chief for FY26
Days after Chief Economic Adviser V. Anantha Nageswaran expressed concerns about the sluggish pace of investments from Indian corporations, Confederation of Indian Industry (CII) President Rajiv Memani reported a significant increase in investment announcements for the fiscal year 2026. According to Memani, these announcements surged by 50% to reach Rs 41 lakh crore, driven by a 20% rise in the gross block of assets from the previous year. He emphasized the need for companies to navigate uncertainties while maintaining a focus on strategic investments.
Investment Trends and Sectoral Insights
Rajiv Memani, who also serves as the chairman and CEO of EY for the India region, highlighted the contrasting performance of various sectors. He noted that while industries such as pharmaceuticals, IT, and finance have shown robust profits, other sectors are lagging behind. Memani pointed out that conglomerates are demonstrating strong financial health, with significant investments in energy and utilities. However, he acknowledged that uncertainty in the market has made companies cautious. They are prioritizing supply chain management, risk mitigation, and maintaining healthy debt-equity ratios.
Memani explained that while investment momentum has fluctuated due to various disruptions, it is gradually picking up again. He mentioned that large projects, particularly in sectors like mining, often face lengthy approval processes that can extend timelines to five or six years. Despite these challenges, he expressed optimism about the investment landscape, particularly in sectors like footwear, where foreign players are increasingly viewing India as a viable manufacturing hub. However, he noted that the textiles sector requires more capacity expansion to meet demand.
Challenges in Domestic Manufacturing
In light of Nageswaran’s remarks about disappointing private sector capital formation, Memani emphasized the need for Indian companies to reduce imports and enhance resilience. The CII has identified 80 to 90 products, including electronic components and compressors, that require domestic production. When asked about the reluctance of Indian companies to invest in these areas, Memani cited an oversupply in the global market and pricing challenges in India. He stressed the necessity for clear policies, technology transfer, and protection measures to stimulate investment in these critical sectors.
Despite the hurdles, Memani remained positive about how Indian corporations are managing the ongoing crisis. He acknowledged the government’s swift response to industry concerns but noted that some players are beginning to experience signs of a slowdown. Price pressures are also mounting, partly due to currency fluctuations. While some cost increases have been passed on in business-to-business transactions, retail prices have seen only marginal adjustments.
Economic Outlook and Policy Recommendations
Memani identified potential risks that could disrupt logistics and energy markets, particularly the impact of rising crude oil prices amid ongoing geopolitical tensions. He warned that if these issues persist, they could pose significant challenges for the economy. Furthermore, he noted that broader uncertainties have affected financial markets, leading to a slowdown in initial public offerings (IPOs) and increased currency volatility.
While he acknowledged that there has not yet been a sharp visible impact on growth, Memani cautioned that a prolonged crisis could start to weigh heavily on economic expansion. He projected a GDP growth rate of 6.5% for the year, but emphasized the importance of targeted policy support to help navigate emerging pressures. This includes easing non-performing asset (NPA) recognition norms and addressing cost challenges related to freight and logistics. Memani also highlighted the critical need for efficient gas allocation and strengthening domestic manufacturing capabilities to bolster long-term economic resilience.
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