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India has spent the past decade fixing almost every structural weakness that once held back private investment. Banks have cleaned up bad loans. Corporate leverage has fallen to multi-year lows. Highways, airports, ports and freight corridors have transformed logistics. Corporate tax rates have been reduced. Production-Linked Incentive (PLI) schemes worth billions of dollars have been rolled out. India has emerged as the world’s fastest-growing major economy.

Yet one question continues to haunt policymakers. Why isn’t Corporate India investing?

The Reserve Bank of India’s latest Financial Stability Report (FSR June 2026) offers perhaps the clearest answer yet.

The problem isn’t capital. It is conviction.

The report paints a striking paradox. Nearly every financial precondition for an investment boom is already in place. Corporate balance sheets are healthy. Debt-equity ratios have improved. Interest coverage ratios have risen to 6.5, reflecting companies’ growing ability to service debt. Banks remain exceptionally well capitalised and continue to lend. Capacity utilisation has climbed to 75.5%, above its long-term average of 74% – a level that has historically preceded investment cycles.

Yet private corporate investment remains subdued. More tellingly, fixed asset growth among listed manufacturing companies slowed sharply to 5.2% in the second half of FY26 from 10.3% in the first half, while cash holdings have risen and the ratio of fixed assets to total assets has declined. Companies are strengthening liquidity rather than building new factories or investing in R&D.

This is not what an investment boom looks like. The RBI’s explanation is understated but telling. Firms, it says, are navigating “an uncertain business environment amid repeated exogenous supply shocks.” Those words deserve close attention because they capture the mood now prevailing in corporate boardrooms.

Spend time talking to chief executives and a remarkably consistent picture emerges. Very few dispute India’s long-term growth story. What they worry about is the uncertainty.

Large industrial projects have investment horizons stretching two decades or more. Companies are looking well beyond quarterly earnings. They want confidence that demand will remain durable, trade rules will stay predictable and geopolitical tensions will not fundamentally alter supply chains or export markets.

Also read: Falling Rupee, Sluggish Private Investment Could Hurt Consumption Demand, Parliament Panel Told

Today, that confidence........

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