India Inc Faces Uphill Battle Amid Muted Consumption and IT Sector Slump

As of August 9th, 2025, the June quarter earnings season has made it clear that consumption demand in India remains muted, which is partly the reason for subdued credit growth. Across sectors, from fast-moving consumer goods to apparel retailers and fast-food chains, companies are struggling to drive higher sales volumes.

The information technology (IT) sector is also going through a rough patch, with major players like TCS announcing layoffs of up to 12,000 employees as they re-adjust to weak demand and the emergence of new technologies. Pricing pressures have also crimped margins for IT firms.

Manufacturers of steel and cement have also not fared well, with flat or declining revenues. The fact that lenders have not been able to grow their loan books meaningfully suggests that customers either have no reason to borrow, are waiting for lower interest rates, or are over-leveraged.

Moreover, banks' earnings are expected to remain under pressure, as yields fall and treasury profits are unlikely to resurface in the coming quarters. The outlook in general is not promising, as reflected in the cuts in the earnings estimates for the Nifty 50 index. Management commentary remains cautious, with hopes of a demand pick-up in the second half of the year, but the many macro-headwinds might make it a long winter for India Inc.