Will Domestic Demand and Infrastructure Spending Propel Growth for Indian Corporates Amid US Tariff Challenges?
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Synopsis
Corporate India is gearing up for a remarkable 8% revenue growth this fiscal year, driven by domestic demand and infrastructure investments. The Crisil report highlights key factors supporting this growth, despite potential challenges from US tariffs affecting export sectors.
Key Takeaways
- Corporate India is projected to grow by 8% this fiscal year.
- Domestic consumption and government capex are driving factors.
- GST rationalization and tax relief will bolster growth.
- US tariffs pose challenges for export-oriented sectors.
- The construction and FMCG sectors are expected to benefit significantly.
New Delhi, Sep 30 (NationPress) Corporate India is projected to achieve a revenue growth of 8 percent in the current financial year, driven by robust domestic consumption and consistent government-led capital expenditure (capex) focused on infrastructure, as indicated by a Crisil report released on Tuesday.
The overall outlook for corporate credit quality remains resilient, with EBITDA expected to stabilize around 12 percent, according to Somasekhar Vemuri, senior director at Crisil Ratings.
Factors such as the rationalization of goods and service tax (GST) rates, income tax relief, reduced inflation, and lower interest rates are anticipated to enhance domestic consumption. The unwavering government capex and favorable domestic demand are crucial in supporting the credit quality outlook for infrastructure and consumption-linked sectors, as stated in the report.
“Moreover, with balance sheet leverage nearing decade lows, there is flexibility to navigate potential global headwinds. Although export-oriented sectors face vulnerabilities due to global macroeconomic challenges, favorable outcomes from trade negotiations, including bilateral agreements with major economies like the US and the European Union, along with further domestic policy support, could mitigate the adverse effects,” Vemuri added.
The credit quality outlook for both banks and non-banking financial institutions remains stable for this fiscal year. Credit growth is expected to accelerate in the second half, aided by lower interest rates, reductions in policy rates, and improved consumption resulting from GST rationalization and tax cuts. Bank credit is projected to grow slightly above the previous fiscal year at around 11-12 percent, while assets under management (AUM) for non-banking institutions are anticipated to grow robustly, similar to last fiscal’s 18 percent.
The report indicates that the construction sector will benefit from diversified order books across roads, water, irrigation, and power segments. Strong and predictable cash flows bolster the outlook for infrastructure segments such as renewable energy, road assets, commercial real estate, and data centers.
The hospitality sector is set to thrive due to increasing momentum in leisure and business travel, with demand surpassing supply.
Additionally, the FMCG sector will benefit from sustained demand, driven by easing inflation, tax relief, and robust profitability from increased premiumization.
However, US-imposed tariffs are likely to impact the credit quality of certain export-linked sectors, given that the US accounts for 20 percent of India’s merchandise exports. In the diamond sector, operating profits may be strained as tariff challenges intensify demand pressures amid growing competition from lab-grown diamonds. Shrimp exporters are also expected to experience revenue declines due to heightened competitive intensity, despite frontloading orders in the first half of this fiscal, the report stated.
Point of View
It is crucial to approach the projections for Corporate India with a keen understanding of both opportunities and challenges. The anticipated 8% revenue growth amidst US tariff uncertainties signifies the resilience of India's economic framework, highlighting the importance of domestic consumption and government-led initiatives in fostering growth.
NationPress
30/09/2025
Frequently Asked Questions
What is the projected revenue growth for Corporate India this fiscal year?
Corporate India is expected to achieve a revenue growth of 8 percent this fiscal year, primarily driven by strong domestic consumption and government-led capital expenditure on infrastructure.
How will the GST rationalization affect domestic consumption?
The rationalization of goods and service tax (GST) rates is expected to enhance domestic consumption by reducing costs for consumers and businesses.
What impact do US tariffs have on Indian export sectors?
US tariffs are likely to weigh on export-linked sectors, especially as the US accounts for 20 percent of India’s merchandise exports, potentially straining profit margins.
