Analysis by MUFG indicates that a continuous 50% tariff may cut India’s GDP growth in 1 per cent over time, with employment-sensitive areas such as the biggest hit for textiles. , Photo Credit: Getty Image/ISTOCKPhoto
Indian companies have seen the highest earnings in Asia, enhancing the risk for American tariff growth with analysts’ forecasts, even if the proposed domestic tax cuts help to cushion.
According to LSEG IBES data, 12 months of earning estimates for India’s large and mid-cap firms have been cut by 1.2% in the last two weeks, the fastest in Asia.
The deduction follows a scarcked weather of quarterly income reports, a combat of weakness among listed firms, which was closed last year and hurt the benchmark equity index.
India’s economy is largely domestic and firms that are part of the Nifty 50 index, earn only 9% revenue from the US, but tariffs up to 50% on exports for the world’s largest economy presents risk for economic growth.
Analysis by MUFG indicates that a continuous 50% tariff may cut India’s GDP growth in 1 per cent over time, with employment-sensitive areas such as the biggest hit for textiles.
Given domestic consumption, Prime Minister Narendra Modi recently announced tax reforms to promote the economy in front of the trade struggle with Washington.
Risa Rasid, the global market of JP Morgan Asset Management, said, “This is an interesting time with the tariff installed in India.”
The valuation is still elevated and “we can potentially see the tariff triggering a broad valuation re-painting down and some can make some domestic-oriented shares attractive,” she said.
The increase in earnings for Indian companies has been in single-unknown percentage for five consecutive quarters, below the 15% -25% increase seen between 2020–21 and 2023-24.
Following April-June income announcements, the 12-month net income forecast for automobiles and components, capital goods, food and beverages, and consumer durables areas saw the deepest cut in earning estimates, showing about 1% or more, each, each.
The government’s schemes to reduce consumption taxes are also expected to promote the country’s GDP growth. Economists in the standard chartered pencil in promoting 0.35–0.45 percentage points in the financial year ending in March 2027.
India’s actual GDP growth was 8.8% between FY 2022 and 2024, the highest in Asia-Pacific. It is estimated to increase by 6.8% annually over the next three years.
The latest fund manager survey of Bank of America shows that India is the highest in just two months from the lowest-service Asian Equity Market.
Asia Equity Strategist Rajat Aggarwal at the Society Generael said, “After an increase in earnings of only 6% in 2024, the recovery speed in 2025 remains dull, as indicated by both economic development parameters and corporate income.”
Published – August 22, 2025 06:09 AM IST
