Private investment picking up as Indian firms clean balance sheets: Sitharaman

India is seeing a revival in private investment, with domestic companies strengthening their balance sheets and attracting capital into sectors such as renewable energy, semiconductors, pharmaceuticals and aviation, Union finance minister Nirmala Sitharaman said at the Bloomberg New Economy Forum on Tuesday.

“Today I can say with confidence that private capital is moving in. India's domestic private capital is moving in, and it's also attracting private capital from elsewhere,” Sitharaman said, adding that companies were investing in sectors that could be within or outside their core areas of activity.

She said India had gone through a difficult phase after 2013-14, when poor asset management and the inability of some companies to repay bank loans hurt both corporate and banking balance sheets.

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Finance Minister Nirmala Sitharaman said many companies have cleaned up their balance sheets, cleared debt and built substantial cash reserves. Banking-sector reforms also addressed earlier balance-sheet problems.

Sitharaman cited renewable energy, semiconductor manufacturing and design, biosimilars, pharmaceuticals, generic drugs and aircraft maintenance, repair and overhaul facilities.

The government uses the National Infrastructure Pipeline (NIP), NaBFID and NIIF. The NIP lists projects for investors, NaBFID provides patient capital for long-term, high-risk projects, and NIIF mobilises funds through investment vehicles.

The publicly accessible NIP lists infrastructure projects from the Centre and states. Investors can search for opportunities by sector and state.

No. Sitharaman said the government would hear investors’ views during Budget consultations, but did not announce a change. SBI Research has recommended scrapping LTCG tax on equities; that recommendation is not a government decision.

“There was a bad time when we called it, you know, balance sheet problems. Banks' balance sheets suffered. Corporates' balance sheet suffered because of asset mismanagement,” she said.

The government subsequently undertook reforms to address problems in the banking sector, while many private companies also cleaned up their balance sheets and cleared their debt, she said. Several companies now have substantial cash reserves, she added.

The remarks assume significance as Sitharaman, during her recent visit to Singapore, pitched India's investment opportunities to global institutional investors and financial institutions. She highlighted infrastructure, semiconductors, artificial intelligence (AI), renewable energy and financial services as key areas for attracting greater capital flows.

Sitharaman said the government had introduced a concessional corporate tax regime in 2019, but the pandemic and subsequent uncertainties delayed investment decisions.

“Today I can say with confidence that private capital is moving in,” she said, pointing to investments in renewable energy, chip manufacturing and design, biosimilars, pharmaceuticals, generic drug manufacturing and aircraft maintenance, repair and overhaul (MRO) facilities.

Long-term capital

India's growing aviation market was creating opportunities for investment in MRO facilities, she said. Indian airlines have placed orders for new aircraft as the country's civil aviation sector expands.

“Somebody gave me a rough estimate between now and 2030, we are likely to get a new aircraft every week,” she said, adding that India's civil aviation sector was growing at about 16%, considerably faster than global civil aviation.

Sitharaman also highlighted the government's efforts to attract long-term capital into infrastructure through the National Infrastructure Pipeline (NIP), the National Bank for Financing Infrastructure and Development (NaBFID) and the National Investment and Infrastructure Fund (NIIF).

The NIP, launched in 2019, is a publicly accessible platform where the Centre and states list infrastructure projects for investors. Sitharaman said the pipeline had grown from projects worth about $2 trillion at its launch to more than $4.5 trillion.

Investors can search for projects by sector and state, she said, adding that the pipeline had helped investors identify opportunities. NaBFID, meanwhile, provides patient capital for high-risk and long-term infrastructure projects, while the NIIF mobilizes funds through investment vehicles focused on infrastructure and real estate development.

Over the past decade, India has made significant progress in building roads, ports, airports and digital connectivity, Sitharaman said. The government intended to sustain this momentum and upgrade infrastructure across sectors.

She also pointed to the growing importance of energy infrastructure as AI and data centres require more electricity. India had attracted capital into semiconductor manufacturing, transmission lines, renewable energy, green hydrogen and green ammonia, she said.

On semiconductors, Sitharaman said India was pursuing a strategy that went beyond advanced chips to include less sophisticated chips used in everyday products such as refrigerators, cars and household devices connected through the Internet of Things.

“India has taken a realistic call that whilst we'll also want to perfect and get into finer and finer nano chips, we'll also be producing less finer ones,” she said, noting that these chips would remain essential for the Indian and global economies.

Currency stabilization

On the rupee, Sitharaman acknowledged that the currency had depreciated significantly over the past one-and-a-half to two years. She said the Reserve Bank of India (RBI) was taking steps to curb volatility rather than defend a particular exchange rate.

“They are not trying to fix the rupee; they are trying to stop the volatility,” she said, adding that the central bank's efforts would continue.

She attributed much of the pressure on the currency to external challenges, while saying India's macroeconomic fundamentals remained sound. The government would maintain fiscal discipline without compromising welfare, education and healthcare spending, she said.

With preparations for the Union budget for 2027-28 underway, Sitharaman also acknowledged the debate around long-term capital gains tax, securities transaction tax and the treatment of different asset classes.

She said these issues had been widely discussed by investors in India and abroad, but declined to indicate whether the government would make changes in the upcoming budget.

“It’s healthy to have this debate, and I will be keen to hear them,” she said.