India’s Corporate Earnings Face Headwinds as US Tariffs Loom

Analysts have slashed India's 12-month forward earnings projections by 1.2%—the steepest decline in the region—as escalating US trade tensions threaten growth. The Nifty 50 index, though deriving just 9% of revenue from American markets, faces disproportionate risk from proposed 50% tariffs on exports.

MUFG warns sustained tariffs could erase 1 percentage point from India's GDP growth, with textiles and other labor-intensive sectors bearing the brunt. Prime Minister Modi's domestic tax reforms aim to stimulate consumption, but five consecutive quarters of single-digit earnings growth underscore systemic challenges.

"Valuations remain elevated despite the tariff overhang," notes J.P. Morgan strategist Raisah Rasid. "This could trigger a broad market re-rating, making domestically focused stocks comparatively attractive." The earnings slump marks a stark reversal from the 15-25% growth rates seen in previous years.