Factory usage needs to jump to 79-80% for investment rate to hit 35%, research shows

The capableness utilisation of Indian factories needs to emergence to 79-80% and stay astatine that level for astatine slightest 3 quarters to induce the backstage assemblage to ramp up the concern ratio successful the economy, according to a caller analysis.

India’s capableness utilisation — a measurement of however intensively factories successful India are being utilized — stood astatine 75.8% arsenic of the April-June 2025 quarter, according to information from the Reserve Bank of India.

The analysis, conducted by the economics probe helping of the Bank of Baroda, looked astatine India’s capableness utilisation rates and compared them to the level of gross fixed superior enactment (GFCF) successful the system since 2010.

The thought is that the much intensively companies usage their existing facilities, the much apt they are to put successful further capacity. 

“It tin beryllium said that capableness utilisation rates request to beryllium maintained successful the scope of 79-80% for 3 successive quarters to scope a GFCF complaint of 34-35%,” the probe study said.

The Parliamentary Standing Committee connected Finance had successful August noted that India would request an concern complaint of 35%, up from the existent 31%, if it wanted the system to turn consistently astatine 8%.

The Bank of Baroda researchers pointed retired that without a higher capableness utilisation rate, manufacturing successful India would not beryllium capable to turn accelerated capable and truthful the dependence connected operation enactment to thrust GFCF would lone increase.

“Such concern indispensable beryllium driven by the backstage assemblage arsenic determination are limits to which authorities capex tin propulsion the envelope,” the study said. “The GFCF successful worth presumption was ₹99 lakh crore successful FY25 and with wide capex of the centre and states to beryllium astir ₹22-23 lakh crore this year, the equilibrium indispensable travel from the backstage sector.” 

The study besides noted that the past clip the complaint of GFCF was 34-35% was successful March 2011, which besides coincided with the capableness utilisation complaint crossing the 80% mark.