Gujarat stays top state for bank-backed investments; Maharashtra second

Private companies in India remain cautious about new investments, but western states, led by Gujarat and Maharashtra, continue to attract the largest share of bank-funded projects, according to a report by The Economic Times. A Reserve Bank of India (RBI) staff study noted that regional advantages and strong infrastructure have helped these states maintain their lead over the past decade. Between FY15 and FY25, Gujarat consistently secured the highest number of projects backed by bank finance, while Maharashtra held the second position over the last four years. In FY25 alone, banks and financial institutions supported 907 projects worth Rs. 3,70,000 crore (US$ 41.98 billion), with Gujarat receiving 152 projects, Maharashtra 111, and Uttar Pradesh 78. Together with Andhra Pradesh and Rajasthan, these five states accounted for nearly 60% of total project costs.
The RBI report highlighted that investment destinations are shaped by factors such as access to raw materials, proximity to suppliers, availability of skilled workers, quality infrastructure, market size, and growth opportunities, keeping Gujarat and Maharashtra as preferred hubs. Despite the concentration of projects in leading states, overall private sector investment growth has remained subdued, with declining project costs sanctioned by banks reflecting cautious corporate sentiment. Companies are maintaining higher cash reserves amid uncertain demand conditions. Looking ahead to FY26, the project pipeline points to a potential rise in capital expenditure to Rs. 2,70,000 crore (US$ 30.63 billion). Supportive factors such as stronger macroeconomic fundamentals, improved corporate balance sheets, rising capacity utilisation, easier liquidity, infrastructure spending, and a one-percentage-point policy rate cut this year are expected to encourage fresh investment activity. 

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.