Morgan Stanley Sees India's Investments Rising To $2.2 Trillion By FY30

India's capital expenditure cycle is expected to gather pace over the next few years, with total investments projected to rise 1.8 times to about $2.2 trillion by FY2030, according to a Morgan Stanley report.

The report estimates that the country could add nearly $1 trillion in fresh capital expenditure over the next five years, lifting the investment rate to around 37.5% of gross domestic product (GDP) from the current 34.6%.

The brokerage said both public and private investments are likely to support the next phase of growth. While the Centre is expected to stick to its ₹12.2 trillion capital expenditure target for FY27, India's infrastructure investment is expected to remain strong alongside a pickup in private sector spending, supported by healthy domestic demand, policy support, and a gradual recovery in exports.

What Is Driving The Next Capex Cycle?

India is at the beginning of a sustained investment upcycle supported by four long-term trends. These include energy security and the shift towards cleaner energy, higher defence spending, manufacturing investments across sectors such as electronics and semiconductors, and the rapid expansion of data centres and related infrastructure.

The report noted that having multiple investment drivers should make India’s capex cycle stronger and more resilient over the medium term rather than relying on a single sector.

How Is Government Spending Supporting Growth?

The central government has already spent ₹2.5 trillion on capital expenditure during the first two months of FY27, reaching 20.5% of its full-year target. That marks a 13.4% increase from the same period last year. Roads and railways continued to receive the biggest share of spending, accounting for 53.4% of the total.

The pace has been slower at the state level, while Central Public Sector Enterprises have used around 17% of their capital expenditure allocation for FY27 so far.

Investment Activity Shows Broader Momentum

Fresh investment announcements also picked up during the June quarter. Manufacturing, electricity, and IT services saw more project activity than in the previous quarter, suggesting companies are gradually stepping up expansion plans. June's high-frequency economic indicators remained resilient even as global uncertainty persisted. The report said easing commodity prices and improving supply chains could provide support to domestic and external demand.

The Production Linked Incentive (PLI) scheme has also continued to add investments. Across 14 sectors covered under the programme, companies had invested about ₹2.4 trillion by FY26. Those investments have generated incremental production worth ₹22.7 trillion, according to the report.

Foreign investment flows also moved higher. Gross foreign direct investment (FDI) stood at $100.9 billion on a trailing 12-month basis. Net FDI reached $11.9 billion, the highest level recorded in 25 months.

The report concludes that India is entering a more durable phase of investment, backed by multiple sectors rather than a single growth driver. Morgan Stanley said this broader base could support the India capex cycle as India’s infrastructure investment gathers pace.

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