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Private companies in India are showing caution in fresh investments, but states in western India, led by Gujarat and Maharashtra, continue to draw the largest share of bank-funded projects, according to a report by The Economic Times.
Data from a Reserve Bank of India (RBI) staff study highlights how regional advantages and strong infrastructure have helped these states stay at the top over the past decade.
Gujarat and Maharashtra lead the pack
Between FY15 and FY25, Gujarat consistently secured the highest number of projects backed by bank finance. Maharashtra held the second position for the last four years, the RBI bulletin noted. In FY25 alone, banks and financial institutions supported 907 projects worth ₹3.7 trillion, with Gujarat receiving 152 projects, Maharashtra 111, and Uttar Pradesh 78. Together with Andhra Pradesh and Rajasthan, these five states accounted for nearly 60 per cent of total project costs.
Why western states attract more projects
Investment destinations, the RBI report said, are influenced by factors such as access to raw materials, presence of suppliers, availability of skilled workers, good infrastructure, market size, and growth opportunities. These conditions have kept Gujarat and Maharashtra as preferred hubs for new projects.
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Investment sentiment remains cautious
Despite the concentration of projects in leading states, the overall growth in private sector investment has been slow. The decline in project costs sanctioned by banks reflects subdued optimism among corporates. Companies are also maintaining higher cash reserves amid uncertain demand conditions, The Economic Times report said.
Outlook for FY26: Signs of improvement
Looking ahead, the project pipeline indicates a possible rise in capital expenditure to ₹2.7 trillion in FY26. Supportive factors such as stronger macro fundamentals, improved corporate balance sheets, rising capacity use, easier liquidity, infrastructure spending, and a one-percentage-point policy rate cut this year are expected to encourage fresh investments, the news report said.
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