A Bank of Baroda report suggests that improved capacity utilization across 23 of 31 Indian industries signals a potential revival in corporate investments as companies efficiently leverage their existing assets to drive output growth.

Improved Capacity Utilization Signals Investment Revival

Improved capacity utilisation across 23 of 31 industries could support a broader revival in corporate investments in the coming months, as companies increasingly use their existing assets to generate output, according to a Bank of Baroda Economic Research report. The report found that the asset turnover ratio of a sample of 2,010 non-banking and financial services companies improved to 1.30 in September 2026 from 1.14 a year earlier. The ratio, which measures sales against fixed assets, is considered a broad indicator of how efficiently companies are using their existing capacity. The improvement was visible across infrastructure-based industries as well as consumer goods segments, including consumer durables and fast-moving consumer goods (FMCG), indicating the possibility of wider investment plans. "There has been better utilisation of capacity, which could herald higher investment in several segments in the coming months," the report said.

Growth in Fixed Assets and Investment

The study also found that fixed assets, including capital work-in-progress, of the 2,010 companies grew by 7.5 per cent in the first half of FY27, marginally higher than the 7.4 per cent growth recorded in the corresponding period of the previous year. Investment announcements also gathered pace. New investment announcements stood at Rs 31 lakh crore in the first half of FY27, compared with Rs 22.7 lakh crore in the year-ago period, according to CMIE data cited in the report. Private sector announcements accounted for Rs 26.6 lakh crore, up from Rs 16.9 lakh crore.

Sectoral Performance and Outlook

Among major industries, fixed asset growth improved in iron and steel to 10.5 per cent from 4.3 per cent, automobile and ancillaries to 18.5 per cent from 14.8 per cent, and healthcare to 27.1 per cent from 14.7 per cent. Information technology also recorded an improvement, with fixed asset growth rising to 13.6 per cent from 5.2 per cent. However, investment trends remained uneven. Fixed asset growth in the power sector slowed to 3.7 per cent from 5.9 per cent, while chemicals recorded growth of 8.2 per cent against 10.7 per cent a year earlier.

The report said the pace of investment revival in the second half of FY27 would depend on government spending on infrastructure and the strength of consumer demand. It noted that sustaining the current momentum would be important for translating better capacity utilisation into higher investment across industries.

(Except for the headline, this story has not been edited by Asianetnews Editorial staff and is published from a syndicated feed.)