Corporate earnings dwindle: India’s private sector remains weighed down by global headwinds—Trump’s tariffs, continuing trade frictions, and a slowing domestic economy. The April–June 2025 quarter marked the ninth consecutive quarter of tepid corporate results. Listed companies reported single-digit revenue growth and, for the second time in four quarters, a contraction in core earnings. The looming threat of a 50% US tariff on Indian goods has further rattled sentiment, raising fears of prolonged revenue weakness.
The headline numbers offered a misleadingly positive picture. Across 3,031 listed firms, adjusted net profit rose 9.4% year-on-year to ₹3.85 trillion, up from ₹3.52 trillion a year earlier. Yet this increase was largely the result of one-off gains. Reliance Industries booked ₹8,924 crore by selling a 4.9% stake in Asian Paints, while HDFC Bank earned ₹9,128 crore from its partial divestment of HDB Financial Services via an IPO.
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Excluding such extraordinary items, profits before tax actually slipped by 0.2% to ₹3.42 trillion. A striking 24.3% surge in “other income” to ₹2.04 trillion propped up the bottom line, disguising the weakness in underlying operations.
Sluggish sales across sectors
Sales growth was equally unconvincing. Aggregate revenues in the quarter rose only 5.3% year-on-year to ₹29.72 trillion—down 3.9% from the previous quarter. Stripping out banks, financials, and oil & gas, the sales increase was a modest 7.3% at ₹21.8 trillion.
Key sectors—banking, IT, consumer goods, automobiles, pharmaceuticals, and power—saw barely any momentum. Only commodity-linked industries such as steel and cement benefited from cheaper energy inputs, lifting profits despite flat sales. The picture is of an economy where demand is weak and corporate pricing power remains constrained.
Consequences of a weak private sector
A slowdown in India Inc matters because the private sector is the economy’s principal engine for investment, employment, and innovation. When its revenues stall, new projects are deferred, hiring slows, and consumer demand weakens further. This creates a vicious cycle: fewer jobs, squeezed household incomes, and weaker consumption—the very driver of 60% of India’s GDP.
The knock-on effect on small businesses is immediate. Local suppliers and retailers dependent on larger companies find themselves caught in the downdraft. With private sector growth trailing the 10.9% expansion in nominal GDP, the risk is that headline growth becomes increasingly disconnected from corporate performance and household well-being.
Analysts point to external shocks as a major factor. The June 2025 quarter was the first to capture the effects of Trump’s new tariff regime. According to the Global Trade Research Initiative, duties of 50–70% threaten India’s exports of shrimp, chemicals, apparel, and jewellery. As the US escalates its trade war, the pressure on Indian exporters will intensify.
Boosting corporate earnings
Policy must respond on several fronts. A faster roll-out of infrastructure spending and targeted tax relief could help revive domestic demand. The Reserve Bank of India is expected to cut rates, which may offer further support. At the same time, trade negotiations with the EU and other partners could soften the blow from lost access to the US market.
Equally, India Inc has to shoulder responsibility. Diversifying export markets, investing in productivity, and strengthening domestic consumption bases are essential to weather external shocks. The government is nudging large firms to establish permanent global footprints instead of limiting themselves to project offices or tender-based work. Outbound investments rose 75% to $29.2 billion in FY25, even as foreign firms repatriated $51 billion—an imbalance that underlines the urgency of building genuine Indian multinationals.
The market is eager for a revival in corporate earnings. But the path to recovery lies less in accounting gains and more in strengthening fundamentals—reviving consumption, diversifying trade exposure, and expanding India’s global corporate presence. Without this reset, India Inc will continue to lag behind headline GDP growth, leaving the broader economy exposed to volatility abroad and fragility at home.