According to Reuters and LSEG IBES data, India has experienced the steepest earnings downgrades in Asia in the past two weeks. Forward 12-month earnings estimates for large and mid-cap Indian firms have been cut by 1.2%, the sharpest cut in Asia. The cuts are attributed to the new U.S. tariffs, which heighten risks to India’s economic growth. Despite only 9% of revenue from Nifty 50 companies coming from the U.S. , a sustained 50% tariff could cut India’s GDP growth by one percentage point over time , with employment-sensitive sectors such as textiles being the hardest hit.
To counter this, Prime Minister Narendra Modi recently announced sweeping tax reforms to boost the economy. Economists at Standard Chartered project that the government’s proposed consumption tax cuts could boost GDP growth by 0.35-0.45 percentage points by FY27. Earnings growth for Indian companies has been in the single digits for five consecutive quarters , with the deepest cuts in recent earnings estimates seen in sectors like automobiles, capital goods, and consumer durables.