NO DEAL, HIGH TARIFFS WEIGH

INDIA INC WADED THROUGH A TERRIBLE Q2, BUFFETED BY TRUMP'S TARIFFS AND A SLUMP IN EXPORTS. YET, SENTIMENT REMAINED RESILIENT, WITH THE QUARTERLY BT-C FORE BUSINESS CONFIDENCE INDEX INCHING UP. WILL THE GST BONANZA BRIGHTEN Q3?

- BY SURABHI

IT'S BEEN a year of firsts in many ways.

Income tax cuts that were unimaginable for most individual taxpayers. A sharp reduction in rates under the goods and services tax (GST) as part of next-generation reforms and record sales during Navratri and the ensuing festive season. Retail inflation at a record low and a string of rate cuts by the Reserve Bank of India (RBI) with expectations of another one in December.

Yet, India Inc remains cautious. After all, another first this year—the 50% tariff imposed by the US on Indian exports—has left many sectors reeling and spooked others even as a trade deal by the end of the year may improve the outlook.

These divergent trends are reflected in the BT-C Fore Business Confidence Survey of 500 chief executive officers and chief financial officers that shows abundant caution and only a little optimism about the impact of the GST rate cuts on sales. The survey, which measured business confidence in the July to September 2025 quarter and was conducted between October 7 and 25, points to a marginal uptick in overall confidence, with some sectors showing weaker sentiment despite the GST rate rationalisation.

The Business Confidence Index rose to 50.6 (on a scale of 100) in the quarter, its highest in 2025 and marginally above 50.2 in April-June of the current fiscal. However, the index remains below the nine-year high of 56.7 recorded in the July-September quarter of FY25.

There is a substantial divergence in sentiment with heavy and light industries reporting higher confidence at 51.5 and 50.4, respectively, compared to the previous quarter. However, the mood is notably glum in the services sector, where it fell to 49.9. The dip came amidst US action on H1-B visas, uncertainty over tariffs and trade deal and advent of artificial intelligence (AI) that is triggering layoffs across industries. The sector covers IT, software, e-commerce, consultancy, and business and financial services.