This study examines how changes in interest rates influence corporate investment decisions in India, with particular attention to the Reserve Bank of India (RBI) policy repo rate during 2020–2025. The period is analytically useful because it contains a sharp pandemic-era easing cycle, a rapid 2022–2023 tightening cycle, a prolonged policy hold during 2024, and a renewed easing phase in 2025. The paper uses an evidence-synthesis methodology based on RBI monetary-policy and banking data, published academic studies, and a financial-ratio framework for assessing profitability, return on assets (ROA), return on equity (ROE), interest coverage ratio (ICR), investment and liquidity. The evidence shows that the repo rate affects firms not only through the direct cost of debt but also through bank lending rates, credit availability, asset prices, expectations and cash-flow conditions. RBI data indicate substantial pass-through from the 250-basis-point tightening between May 2022 and September 2024 to external benchmark-linked rates and to weighted average lending rates, although transmission to outstanding loans was slower. The investment response is therefore heterogeneous: highly leveraged and interest-sensitive sectors such as real estate, infrastructure, capital goods and automobiles are more exposed, while firms with strong internal cash generation or low leverage are less sensitive in the short run. The paper concludes that interest-rate changes materially alter the hurdle rate, financing burden and liquidity position of firms, but investment decisions cannot be explained by the policy rate alone; demand expectations, firm leverage, financial constraints and sector structure also condition the response.

Vishal singh rathaur, Dr. Ujwala Narkhed, "Impact of Interest Rates on Investment Decision" International Journal of Scientific Research and Engineering Development, V9(5): Page(772-778) September - October 2026. ISSN: 2581-7175. www.ijsred.com. Published by Scientific and Academic Research Publishing.