Finance Minister Sitharaman Expresses Concern Over Corporate Hesitation Despite Government Capital Push; CII Offers Counter-Perspective
New Delhi, July 27, 2025 – A significant hurdle for investment by India’s private corporate sector is emerging: the uncertainty surrounding international trade deals. That’s the key takeaway from a recent report by UBS Securities India, which suggests that a lack of clarity on global trade agreements is making companies hesitant to commit to long-term capital expenditure (Capex).
“From corporates’/investors’ point of view, we believe trade deals do reduce business uncertainty–and uncertainty is one of the factors that has constrained India’s private corporate sector from investing,” the UBS report highlighted, underscoring how crucial a predictable trade environment is for businesses to plan and expand.
Finance Minister’s Concerns: Why Aren’t Corporates Investing More?
The UBS report echoes concerns recently voiced by Union Finance Minister Nirmala Sitharaman. Speaking at an event in New Delhi on Saturday, Sitharaman openly expressed her worry about the lack of substantial investment from corporate firms, especially given the strong capital push from both central and state governments.
“From government, whether it’s the state or the centre, the two powerful instruments with which we can influence investment in the country are government spending and also making policies which are attractive,” Sitharaman explained. She then directly posed the question: “Is the Indian private sector investment going in pace with the public investments? The first few years after COVID, probably not.”
The Finance Minister delved deeper, questioning why private investment hasn’t accelerated even after significant reforms. “In fact, why would I say COVID? In fact, even from 2019, once the twin balance sheet problem was addressed. And the corporate tax was brought down. We can see that the balance sheets of the corporate sector have really become healthier,” she noted. “But today, what observers tell me and what I keep sometimes talking to industries, business leaders, are they sitting over passive investable funds? Meaning investable funds which are being engaged passively rather than invest in producing more in having capacity expansion and so on. So that’s an issue which I would obviously want the industry to speak about,” Sitharaman urged, calling for industry leaders to shed light on their investment strategies.
CII Offers a Different View: Private Capex is Happening
Interestingly, Rajiv Memani, President of the Confederation of Indian Industry (CII), offered a counter-perspective recently in a conversation with ANI. While acknowledging a perceived slowdown, Memani asserted that private capital expenditure is indeed taking place across various industrial sectors in the country, challenging the prevailing market sentiment of a general slowdown.
Private Capex refers to the investments made by private sector companies into long-term assets such as property, equipment, or technology, with the clear intention of expanding the company’s operations.
Memani did concede a slowdown over the past 6-8 months, but he attributed this to external factors rather than any deep-seated structural issues within the Indian economy. Looking at the bigger picture, private capital expenditure in India has registered a robust Compound Annual Growth Rate (CAGR) of 19.8 percent over the last five years, from FY21 to FY25E. This impressive growth has been primarily driven by key sectors like oil and gas, power, automobiles, and commodities, indicating targeted investment in crucial areas of the economy.