Analysts Slash India’s Profit Outlook as US Tariffs Loom Over Growth
Wall Street sharpens its knives—India's growth story faces a tariff-induced reality check.
Profit Forecasts Nosedive
Analysts aren't just trimming estimates—they're hacking away at India's earnings projections. US trade barriers threaten to derail one of the world's fastest-growing economies, and the numbers don't lie. Corporate profit forecasts get slashed as supply chains shudder.
Growth Engine Sputters
New tariffs hit export-dependent sectors hardest. Manufacturing margins compress, tech services face headwinds, and foreign investment hesitates. The very engines of India's economic miracle are now grinding gears against protectionist policies.
Market Realities Bite
Investors recalibrate portfolios while CFOs scramble for contingency plans. The subcontinent's valuation premium evaporates faster than a meme coin's promises. Another reminder that in global finance, geopolitical risks always collect their pound of flesh—with interest.
India’s corporate earnings growth stuck in single digit
MUFG estimates that keeping a 50% levy in place could shave 1 percentage point off India’s GDP growth over time, with labor-heavy sectors such as textiles taking the biggest blow.
To support spending at home, Prime Minister Narendra Modi has rolled out broad tax changes aimed at lifting consumption as trade tensions with Washington build.
“It’s a little bit of an interesting time given what’s happened with the tariffs that have been imposed on India,” said Raisah Rasid, global market strategist at J.P. Morgan Asset Management. Valuations remain elevated, and “we could potentially see the tariff triggering a broad valuation re-rating downwards and make some of the domestic-oriented stocks attractive,” she said.
Corporate earnings in India have grown at single-digit rates for five straight quarters, well below the 15%-25% pace seen from 2020-21 through 2023-24.
Tax cuts may boost India’s GDP by up to 0.45%
After April–June results, analysts cut 12-month net income forecasts the most in automobiles and components, capital goods, food and beverages, and consumer durables, with each group lowered by about 1% or more, the data indicate.
Planned cuts to consumption taxes are also expected to help growth. Standard Chartered’s economists estimate the measures could add 0.35-0.45 percentage points to GDP in the fiscal year ending March 2027.
India’s real GDP growth averaged 8.8% in fiscal 2022 to 2024, the fastest in Asia-Pacific, and is expected to average 6.8% a year over the next three years.
Investor sentiment has turned as well. Bank of America’s latest fund manager survey shows India dropped from the most-favored to the least-preferred Asian equity market in just two months.
“After disappointing earnings growth of only 6% in 2024, the pace of recovery remains sluggish in 2025, as indicated by both the economic growth parameters and corporate earnings,” said Rajat Agarwal, Asia equity strategist at Societe Generale.
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