India poised to benefit from global capex supercycle: Ravi Dharamshi | People

Can you tell us about the global supercycle that you are closely observing?

Something interesting is happening. Over the last 35 years, the world was in an era of minimising physical assets. Americans were outsourcing manufacturing and optimising labour costs. That is changing. On a $120 trillion GDP, a 2-3 per cent rise in capex implies $2-4 trillion of additional annual investments. This is a global capex cycle driven by factors fundamentally different from the previous cycle. The larger thesis is that the global economic and geopolitical order is undergoing a structural shift. 

We believe the global capex cycle is much broader than a conventional investment cycle. Countries are investing in manufacturing capacity, supply-chain resilience, defence, energy security, power infrastructure and technology infrastructure. The common driver is the need to rebuild strategic capacity and reduce vulnerabilities created by hyper-globalisation.

What is the big opportunity you see for Indian companies?

MRO is a significant opportunity. The Adani Group, for instance, is positioned across several of these opportunities, including aerospace, defence and MRO. India is moving towards becoming a market with close to 2,000 aircraft, creating a substantial long-term requirement for aircraft maintenance and related services. The MRO opportunity could increasingly shift to India. Companies with access to airport infrastructure and land around airports are naturally well positioned. Adani, given its presence across airport infrastructure, is well positioned to benefit from the growth of India’s MRO industry. Many of these opportunities are currently in the private market. However, I expect several firms to come to the public markets over the next three to five years.

What themes will emerge as part of the Nifty 50?

The first major change will be greater representation of new sectors in the Nifty 50. Today, there is no defence, semiconductor value-chain firm, energy-transition player or aerospace company in the index. Over the next five to 10 years, I expect one or two companies to emerge as leaders from each sector and eventually become part of the index. Aerospace components alone represent a $250 billion opportunity.

Why are mid- and small-cap companies doing well if the global capex cycle is supposedly not favourable for India?

India’s total market capitalisation peaked at around $5 trillion in September 2024 before correcting to roughly $4 trillion, a decline of close to 20 per cent. That is a market-cap movement. While the headline index may not fully capture the opportunity, significant capital is being deployed and new businesses and profit pools are emerging as India becomes part of the global supply-chain realignment.

Power-grid capex is increasingly becoming critical. Transformers, conductors, cables and wires are essential to support rising electricity demand. AI is a significant driver of power demand, while the same physical infrastructure is critical for the energy transition. Renewable power, particularly solar, is intermittent and often generated far from major centres of consumption.

Where are we right now in the cycle?

We are clearly in the infrastructure buildout phase, and the biggest beneficiaries are likely to be firms supplying those. As AI models mature and technological improvement begins to plateau, the focus will shift towards economics, efficiency and monetisation rather than simply expanding use cases. That is when we will move towards the platform-building phase and eventually the application layer. The eventual winners and biggest wealth creators may emerge later. Currently, companies that control or supply critical bottlenecks in the physical infrastructure chain are likely to be among the biggest beneficiaries.

What has changed recently, especially after the Iran-US war?

The world is now looking for locations that can provide relatively neutral ground, reliable power and a skilled workforce. India has all three, which is one reason it has emerged as a major alternative destination for data centres. India’s regulatory environment is also supportive. This is driving data-centre capex into the country and supporting the broader private-sector capex cycle. In 2001, India’s central government capex was around ₹50,000 crore. By 2008, at the peak, it had risen to around ₹6 lakh crore, almost a 12-fold increase. Currently, the starting base has largely been private-sector capex. India was stuck in the ₹5–6 lakh crore range until around 2023–24. Since then, capex has risen to around ₹12 lakh crore. In three to four years, it has roughly doubled.

India’s manufacturing exports have not worked. Will this change?

During the earlier cycle, India’s manufacturing exports did not play a major role. Services were the primary export engine. This time, India has the potential to participate more directly through exports. Greater access to Western markets could provide an additional tailwind. India can increasingly become a neutral and competitive alternative to other emerging markets. As thematic investors, our approach is to identify emerging profit pools. Even in a challenging or declining market, there will always be pockets of opportunity. The key is to identify where capital is flowing and participate in those areas while managing the risk of being caught on the wrong side of a broader downturn.