Uncertainty Looms

INDIA INC'S SPIRITS IN Q3FY26 REMAINED LOW DESPITE HIGHER-THAN-ANTICIPATED GDP GROWTH IN FY26 AS US TARIFFS HIT HOME

- SURABHI

THE INDIAN ECONOMY is ending FY26 on a high note. GDP growth is seen to be resilient despite 50% tariffs by the US. The momentum is likely to continue in FY27, albeit at a slightly softer pace.

But this mood of cautious optimism does not seem to reflect on the ground, where many companies are apprehensive about growth and private consumption while battling the impact of the US tariffs.

This is reflected in the BT-C Fore Business Confidence Survey of 500 Chief Executive Officers and Chief Financial Officers for the third quarter of the fiscal. The survey, which measured business confidence in the October-December 2025 quarter and was conducted between January 2 and 13, 2026, shows that sentiments have slipped marginally.

The Business Confidence Index rose to 50.4 (on a scale of 100) in the quarter ended December 2025, from 50.6 in the July-September 2025 quarter and much below the 53.8 recorded a year ago in OctoberDecember 2024. While this was the second highest reading in 2025, it was just a notch above the 50 mark.

A dip below 50 denotes a contraction in confidence.

Business confidence, as measured by the BCI, remained muted across sectors and industry sizes with sentiment in the services sector and among small and micro-sized firms remaining below the 50 mark.

Experts say while goods and services tax (GST) and income tax cuts have boosted consumer demand this fiscal, the momentum may not sustain in the upcoming quarters.

In fact, the IMF too has projected in its recently released World Economic Outlook Update that India's GDP growth will moderate to 6.4% in FY27 "as cyclical and temporary factors wane." But on a brighter note, it has revised the FY26 GDP growth forecast upwards by 0.7 percentage point to 7.3%.