India Inc may need ₹130–140 lakh crore in debt by FY31 to fund capex and credit growth: Crisil

Corporate India is expected to require debt funding of ₹130–140 lakh crore between FY27 and FY31 to finance large-scale capital expenditure in infrastructure and industrial sectors, meet working capital requirements, and support growing retail credit demand, according to a report by Crisil Ratings. 

The report estimates overall capital expenditure of ₹145–155 lakh crore during FY27–FY31, nearly 1.5 times higher than the investment undertaken in the preceding five fiscals. Of this, ₹55–60 lakh crore is expected to be funded through long-term debt while the remainder will be financed through budgetary allocations and internal accruals. 

Stronger balance sheets support capex cycle 

Corporate India’s stronger balance sheets and the improved risk profile of infrastructure projects place companies in a better position to undertake debt-funded investments. 

Over the past decade, corporates have significantly deleveraged. The median gearing ratio of Crisil-rated entities is estimated at 0.4–0.5 times as of March 31, 2026, compared with 1.05 times as of March 31, 2015. At the same time, revenues and profitability across sectors have improved steadily, providing companies greater financial flexibility to fund expansion. 

Infrastructure assets have also seen improved credit profiles, supported by better risk-sharing mechanisms in concession agreements, increased participation of central government counterparties, and the rise of infrastructure investment trusts (InvITs). This has led to an improvement in the median rating of infrastructure assets in the Crisil portfolio—from BBB+ in March 2018 to AA− by December 2025. 

Working capital and retail lending to drive borrowing 

Apart from capex, corporates are expected to require ₹30–35 lakh crore in debt to fund working capital needs, assuming revenue growth of around 11% over the next five years. 

Non-banking financial companies (NBFCs) will also need to raise ₹40–45 lakh crore in incremental debt to support an estimated 15% growth in their retail loan books during the same period. 

India’s financing ecosystem—including banks, the debt capital market (corporate bonds, commercial papers and certificates of deposit), and external commercial borrowings (ECBs)—is expected to grow at an annual rate of 10–11% through FY31. However, even with this growth, Crisil estimates a potential funding gap of ₹10–20 lakh crore over the next five fiscals. 

The wholesale bank credit segment expanded at around 10% annually between FY21 and FY26. Strong capital buffers, improved asset quality and robust profitability place the Indian banking system in a favourable position to support credit demand. However, the relatively high credit-to-deposit ratio, around 82% as of January 2026, remains a key monitorable. Banks may face constraints in expanding wholesale credit beyond the long-term deposit growth rate of about 11%, as they balance credit growth with profitability and deposit mobilisation. 

As a result, the banking system is expected to contribute ₹55–60 lakh crore in wholesale credit by FY31, implying annual growth of around 10%. 

Debt capital markets to play a larger role 

External commercial borrowings are expected to grow slightly faster at 9–10% annually, compared with 8.6% growth between FY20 and FY25. Recent regulatory changes by the Reserve Bank of India are expected to support borrowers seeking overseas debt. However, the cost competitiveness of such borrowings will depend on global macroeconomic conditions, currency volatility and hedging costs. 

Meanwhile, the domestic debt capital market has expanded steadily, with outstanding issuances projected to reach ₹70 lakh crore by FY26 from ₹41 lakh crore in FY21, reflecting a compound annual growth rate (CAGR) of 11%. 

In the base case, Crisil expects the debt capital market to grow further to ₹115–120 lakh crore by FY31 at a similar pace, supported by increasing participation from managed investment products.