Our Bureau
Mumbai
India’s investment outlook is showing signs of improvement, with accelerating credit growth, rising corporate revenues and a recovery in exports indicating stronger private sector investment in the coming months, according to a report by HSBC. The report also suggested that a possible decline in global energy prices could provide relief from inflationary pressures and improve corporate profit margins.
Titled ‘Why so down on India?’, the report, dated November 6, highlighted that increased lending to businesses could encourage companies to expand operations and undertake fresh capital expenditure. Funds flowing to the commercial sector rose to 6.6% of GDP during April-September 2026, compared with 4.7% in the corresponding period last year.
Credit growth among larger companies, which typically undertake major investment projects, accelerated significantly, while smaller businesses also increased borrowing. Corporate revenue growth also moved above its average trend of the past decade in both nominal and real terms, strengthening the prospects of further investment despite higher interest rates.
HSBC noted that nearly 70% of around 100 economic growth indicators tracked by its India economics team signalled expansion in the latest quarter, compared with just under 55% in the second quarter. The report also indicated that foreign direct investment (FDI) could recover, supported by India’s economic growth, policy reforms and increasing investments in data centres.
On the export front, rising services exports helped cushion the impact of higher oil prices and kept the current account deficit relatively stable. An improvement in goods exports also indicated that India was gradually gaining a larger share of global markets.
However, the report flagged concerns over weak rural demand following rainfall shortages and repeated heatwaves, along with inflation affecting household purchasing power and corporate margins. HSBC expects consumer price inflation to stabilise, while a cooling of global energy prices could offer additional economic relief.