Archive · 29 Sep 2026
India’s Private Investment Falls Despite Project Announcements Doubling
India’s companies are announcing many more projects than before.
But private investment is still going down.
This is happening even though companies are making record profits.
Economist Manish Sharma said some companies may think the extra demand from GST changes will not last.
He also said large companies are using government incentives such as production-linked incentives.
Small and medium-sized businesses may need simpler compliance rules.
Foreign investors are still concerned about unpredictable policies.
Sharma pointed to Vietnam and Bangladesh as countries India could learn from.
India’s private investment has declined even as project announcements more than doubled.
The decline comes despite record corporate profits.
Economist Manish Sharma said firms may view the demand boost from GST rationalization as temporary.
Sharma said large companies are benefiting from production-linked incentives and other government programs.
He called for lower compliance burdens for small and medium-sized businesses and more predictable rules for foreign investors.
- Who
- Indian private companies, small and medium-sized businesses, foreign investors, and economist Manish Sharma.
- What
- Private investment in India is declining while project announcements have more than doubled, despite record corporate profits.
- Where
- India; Manish Sharma made the cited comments from Hosei University in Tokyo.
- Why
- Sharma attributed the situation partly to expectations that GST rationalization-driven demand was a one-off, along with compliance burdens and policy unpredictability.
Current Incentive-Based Growth
Broader Investment Reform
Who benefits from existing policies?
Current Incentive-Based Growth
Large companies are taking advantage of production-linked incentives and other government incentives.
Broader Investment Reform
A broader growth model should reduce compliance burdens for small and medium-sized businesses so investment is not concentrated among large firms.
How durable is the demand boost?
Current Incentive-Based Growth
Companies can benefit from the demand created by GST rationalization while it lasts.
Broader Investment Reform
Manish Sharma said the demand windfall may be a one-off, making longer-term investment require wider reforms and greater predictability.
Foreign investment environment
Current Incentive-Based Growth
India’s existing policy incentives continue to support corporate activity and project announcements.
Broader Investment Reform
Foreign investors remain wary of unpredictability, and Sharma said India could learn from the compliance frameworks of Vietnam and Bangladesh.
- Private investment
- Declining
- Project announcements
- More than doubled
- Corporate profits
- At record levels
- Demand boost
- Described by Manish Sharma as driven by GST rationalization and potentially one-off
- Government support
- Large firms are benefiting from production-linked incentives and other incentives
- Recommended reform
- Reduce compliance burdens, especially for small and medium-sized businesses
- Investor concern
- Foreign investors remain wary of unpredictability