India's Investment-To-GDP Ratio Seen At 37.5% By FY30: Morgan Stanley

(MENAFN- KNN India) New Delhi, May 4 (KNN) Global brokerage Morgan Stanley has raised its forecast for India's investment rate, citing emerging opportunities despite global concerns over oil prices and the ongoing conflict in West Asia.

In its latest report, the brokerage revised India's investment-to-GDP ratio estimate to 37.5 percent by FY30 from its earlier projection of 36.5 percent. This translates into an additional USD 800 billion in cumulative capital expenditure over the next five years.

Energy, Data Centres and Defence to Lead Investments

According to the report, nearly 60 percent of the additional investment is expected to flow into sectors such as energy, data centres, and defence, reported Money Control.

Morgan Stanley said higher capital expenditure could improve corporate profit share in GDP and support earnings growth of over 15 percent CAGR over the next five years, which could provide further support to Indian equity markets.

The report noted that the West Asia conflict has highlighted India's dependence on imports for energy and critical inputs, prompting policymakers to strengthen domestic capacities.

In the energy sector, India continues to import around 85 percent of its crude oil and nearly 50 percent of its natural gas requirements.

The report highlighted measures such as expansion of strategic reserves, higher domestic coal production, renewable energy expansion, and faster execution of nuclear projects.

In fertilisers, the report noted efforts to reduce reliance on imported DAP and MOP through higher domestic urea production, diversification of import sources, and improved nutrient efficiency.

Defence spending is also expected to rise structurally, with India aiming to increase defence expenditure from around 2 percent to 2.5 percent of GDP by FY31, supported by localisation and greater private sector participation.

Strong Growth Outlook, Risks Remain

The brokerage also projected strong growth in India's data centre sector, estimating capacity expansion from 1.8 GW currently to 10.5 GW by FY31, supported by global diversification trends and domestic data localisation policies.

Morgan Stanley maintained a positive outlook on India's medium-term growth, projecting real GDP expansion of 6.5-7 percent, while flagging risks related to crude oil prices, fertiliser subsidies, defence execution, and power availability for data centres.

(KNN Bureau)

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