Karki forecasts an acceleration in investments in these new sectors as companies expand their capacities and integrate advanced technologies. While India’s AI infrastructure spending hasn’t yet reached the levels seen in the US, investments in AI applications, data centres, and related services are expected to increase and underpin the next phase of the capital expenditure (capex) cycle.
This optimism aligns with the trend of corporate investment growing at a pace that outstrips the overall economy. Karki notes that capex by publicly listed companies hit nearly ₹13 trillion in the financial year 2025-26 (FY26), reflecting an approximate 14% growth on a like-for-like comparison.
“When you examine the latest GDP figures, gross fixed capital formation has been a key contributor to the growth,” he remarked.
Karki pointed out that the resurgence in investments is not limited to sectors like utilities, industrials, and metals. Businesses in discretionary spending, healthcare, and auto components are also stepping up their capital expenditures, even though these sectors aren’t typically considered capital-intensive.
Karki emphasized that India is currently experiencing a lag in the large-scale AI infrastructure development observed in the US, where AI data centres and computing capacity have emerged as major contributors to growth. Nonetheless, he is confident that India is poised to benefit from the adoption and commercialization of AI technologies.
“While AI infrastructure may be lacking, the applications are present,” Karki noted, highlighting investments from IT service providers, telecom companies, and industrial firms in data centres and AI-related projects.
He also mentioned that data centres are becoming a crucial investment focus as companies strive to enhance digital infrastructure and accommodate growing computing demands. Numerous publicly listed firms have either declared investments in data centres or are aligning themselves within the ecosystem through equipment and service offerings.
Karki anticipates a moderation in capital expenditure growth following several years of rapid increase. He indicated that fiscal resources might be increasingly allocated to areas such as food and fertiliser subsidies, especially with concerns about weather-related risks and the potential for a strong El Niño phenomenon.
However, he believes the government’s commitment to strategic sectors will remain steady.
“The emphasis on investing in the country for self-reliance across vital sectors such as energy, power, and defence will persist,” Karki asserted.
For the full interview, watch the accompanying video
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