India Inc appears to be placing bold bets despite a volatile geopolitical environment, with new project announcements rising 30% year-on-year to ₹14.5 trillion in the April–June quarter from ₹11.3 trillion a year earlier, according to Centre for Monitoring Indian Economy (CMIE) data.
Sequentially, investment proposals edged up nearly 3%. However, this impressive aggregate masks a glaring asymmetry as just two sectors—nuclear power and data centres—account for nearly three-fourths of all announcements during the quarter.
The breakdown is telling. Data centre announcements, totalling ₹4.5 trillion, were anchored by mega-ventures like the Raigad Data Centre project (nearly ₹2 trillion) and the Mumbai Metropolitan Region Integrated Green Data Centre Park and AI Compute Hub ( ₹1.1 trillion).
Meanwhile, nuclear power attracted just over ₹6 trillion in investments, driven by massive proposals such as the Maharashtra Nuclear Power Project and Purnagadh nuclear power projects in Ratnagiri, each valued at ₹2 trillion. To put this in perspective, aggregate capital commitments across data centres and nuclear power skyrocketed from under ₹1 trillion in the same quarter last year.
Growth illusion
Much of the momentum in the nuclear sector stems from the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, enacted in December. By replacing the old Atomic Energy Act, the new law effectively ends the state monopoly, permitting private players to run nuclear power facilities and forge international partnerships to bring in global expertise.
To be sure, the private sector drove four of the five nuclear proposals this quarter, the CMIE data showed. This momentum appears set to continue, with the Adani Group already outlining plans to develop 10GW of nuclear capacity by 2035. Meanwhile, the parallel boom in data centres is being fuelled by an accelerating artificial intelligence (AI) build-out.
These investments are aligned with India's immediate structural priorities, including power transmission, AI-focused digital infrastructure, electronics import substitution, defence manufacturing and electric vehicles, said Garima Kapoor, deputy head of research and economist at Elara Capital.
But unlike previous investment cycles driven by roads, railways or manufacturing, these projects are unlikely to generate comparable economy-wide multiplier effects because they are significantly less labour-intensive, she said.
The hollow core
Outside these two standout segments, traditional sectors have been left largely high and dry. Manufacturing—historically the single largest driver of investments - slipped from ₹3.7 trillion to ₹2.04 trillion, dragging its share down from 33% to 14%. Mining proposals plummeted by nearly 90% year-on-year.
Meanwhile, investments in transport services, typically the backbone of the government’s infrastructure push, virtually vanished from the pipeline, plunging from ₹3.3 trillion to just ₹0.26 trillion.
Stripping out these outlier segments and the overhang of the West Asia crisis reveals the underlying slowdown. On a core basis, excluding nuclear power and data centres, new investments collapsed by nearly 74% sequentially and 67% over the previous year.
However, Kapoor said that the weakness extends beyond the disruption caused by the West Asia conflict. Many of the industries that powered India's previous investment boom have reached a stage of steady but mature growth, and no longer require aggressive capacity additions.
Economists believe that a broader revival in private capex, particularly in manufacturing, is more likely to depend on fresh export opportunities arising from trade agreements with markets such as the UK, the EU and the US. “Until then, companies are likely to remain cautious as elevated commodity prices squeeze margins, with a meaningful pick-up in investment appetite likely only towards the end of FY27,“ Kapoor added.