Sinha now told ET that it would be ‘myopic’ to assess the market reaction in the short term, since the tariff negotiations between India and the US will be a long -term process. “Even after negotiations, we look at rates of 20-25% compared to an average of 3% prior to the Trump regime. This will have a lasting impact on the company’s income,” he noticed.
Although warning of “fragmentation and protectionism” that influence trade and capital flows, Sinha claimed that investors should be in line with structural domestic themes. “We have to be very careful, but within consumption, cars, e-commerce and renewable energy sources there are opportunities on the rise despite global headwinds,” he said.
Delay in business growth
In the first quarter, growth of the business solid for non-financial companies was already delayed to 3.8-3.9%, with sectors such as consumer goods, cars and engineering witnessing delay. “With the exception of BFSI, most sectors have achieved a negative return in the past year. The profit growth, which was on average 20% until 2024, has now fallen to 5% in the past quarters. The trajectory for us looks modest,” warned Sinha.
He emphasized that although the government tries to compensate for the shocks through GST reforms, cutbacks and connected incentives, tax limitations can limit the expenditure on infrastructure. “Capital goods have already been corrected by 12-13% in the past year and with contracting tax revenues, the Government Capex can take a rear seat,” he said.
With approximately RS 1.60,000 crore in tax revenues shared between state and central governments, a GST reduction could hinder government spending, making the infrastructure financing stable over the past six to seven years. As tax revenues decrease, the GST collections are expected to fall, so that the capacity of the government for considerable capital expenditures for infrastructure and probably delaying industries depends on government spending.
Sectoral prospects
About the sectoral prospects, Sinha pointed to domestic consumption as the greatest beneficiaries. “Cars, consumer sectors and to a certain extent, the pharmaceutical, which remain exempt from rates, will win from GST reductions and measures focused on households. Investors are already rotating from BFSI in consumer-driven sectors,” he explained. He also has renewable energy, e-commerce and car fears as promised opportunities. “The solar energy space is seeing aggressive activity. E-commerce could benefit from a consumption boost, while auto-assured course of lower tax rates can be won. After March 2026, with the passage of compensation provision, in particular cars can get further lighting,” Sinha added.
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