Private companies in India are being cautious about new investments, but states in western India, led by Gujarat and Maharashtra, continue to receive the majority of bank-funded projects, according to a report.

Data from a Reserve Bank of India (RBI) staff study show how regional advantages and strong infrastructure have helped these states remain at the top over the last decade.

Key Highlights

• In FY25, banks funded 907 projects worth ₹3.70 lakh crore; Gujarat got 152, Maharashtra 111. 
• Gujarat has led in bank-financed approved projects since FY15; Maharashtra held second place in last four years.

Gujarat and Maharashtra lead the pack

Between FY15 and FY25, Gujarat consistently secured the highest number of bank-financed projects. According to the RBI bulletin, Maharashtra has held the second position for the past four years. In FY25, banks and financial institutions supported 907 projects totaling ₹3.7 trillion. Gujarat received 152 projects, Maharashtra 111, and Uttar Pradesh 78. Along with Andhra Pradesh and Rajasthan, these five states accounted for nearly 60% of total project costs.

Why do western states get more projects?

According to the RBI report, investment destinations are influenced by factors such as raw material access, supplier presence, skilled worker availability, good infrastructure, market size, and growth opportunities. These conditions have kept Gujarat and Maharashtra as the preferred locations for new projects.

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Investor sentiment remains cautious

Despite the concentration of projects in major states, overall private sector investment growth has been slow. Bank-approved project cost reductions reflect corporates' cautious optimism. Companies are also keeping more cash on hand as demand remains uncertain.

Outlook for FY26: Signs of Improvement

The project pipeline indicates a potential increase in capital expenditure to ₹2.7 trillion in FY26. Supportive factors such as stronger macro fundamentals, improved corporate balance sheets, rising capacity utilization, easier liquidity, infrastructure spending, and a one-percentage-point policy rate cut this year are expected to encourage new investments, according to the news report.