New Delhi, Jan 30 (UNI) The capital goods sector is expected to witness continuity in the government’s infrastructure-led growth strategy in the union Budget 2026, with emphasis on sustaining public capital expenditure, improving project execution and supporting domestic manufacturing, rather than on fresh structural reforms.
Government data show public capital expenditure rose nearly 28 per cent year-on-year to Rs 6.6 trillion during April-November 2025, driven by spending on roads, railways, power transmission and defence manufacturing projects.
Analysts say the Budget is unlikely to trigger immediate market moves but could reinforce medium-to-long-term order visibility for engineering, construction and equipment companies.
Order inflows across engineering, procurement and construction firms remain robust, led by highways, railways, power transmission and defence projects. Demand for power equipment is rising due to grid expansion and renewable energy evacuation projects, while defence indigenisation is driving higher domestic sourcing of platforms and systems.
Private industrial capex is also gradually improving, with industry watchers noting rising activity in urban infrastructure and transmission segments.
Public capital expenditure is projected to grow about 10 per cent to Rs 12.3 lakh crore in FY27, with transport, defence and energy infrastructure continuing to be prioritised.
Analysts note that execution is expected to take precedence over new announcements, underlining the government’s focus on delivery and fiscal prudence. Proposed measures such as a Rs 25,000 crore risk guarantee fund may ease financing pressures on infrastructure projects.
Industry bodies and businesses are also pushing for broader reforms in Budget 2026. A pre-Budget survey highlighted job creation, infrastructure thrust and stronger support to exports as key macro priorities, while calling for enhanced capex in defence and manufacturing to modernise assets and deepen domestic capabilities.
Financial sector analysts say the government is balancing infrastructure support with fiscal consolidation. Reports point to moderation in capex allocation growth in recent years as part of a broader strategy to manage the fiscal deficit, even as absolute spending on infrastructure remains significant.
Stocks expected to benefit from sustained capital expenditure include Larsen & Toubro, Siemens India, ABB, BHEL, RVNL, IRCON International, HAL and Bharat Electronics, reflecting strong order pipelines and multi-year project engagements. Broader market expectations also extend to sectors such as steel, cement and power equipment, which stand to gain from continued infrastructure investment.
With Finance Minister Nirmala Sitharaman scheduled to present the Budget on Sunday, industry and investor attention will be on announcements that support infrastructure momentum while retaining fiscal discipline.
Apart from capital goods, analysts are also watching for policy cues on taxation, digital infrastructure, credit access and reforms to further catalyse private participation in growth.
