'Beginning Of Turnaround': Brokerage Firm Hints At India Inc's Robust Revival Despite Trump's Tariffs

India’s economic momentum is showing early signs of a turnaround, with domestic consumption rebounding and private investment poised for a robust revival, according to a new report by Motilal Oswal Financial Services (MOFSL). Despite global headwinds, including the impact of US tariffs under the Trump administration, early indicators such as rising auto sales and policy-driven liquidity injections suggest that India Inc is gearing up for a strong growth phase in FY26.

The report, titled “Consumption First; Private Capex Next?”, notes that Foreign Institutional Investors (FIIs) withdrew USD 9 billion between July and September 2025 amid global uncertainties. Domestically, high interest rates, tight liquidity, and slower growth in IT and banking sectors had muted urban consumption.

To counter weakening demand, the Reserve Bank of India (RBI) cut policy rates by 100 basis points to 5.5%, slashed the CRR by 150 basis points, and infused nearly Rs 9 trillion into the banking system through operations including FX swaps, OMOs, and VRR/VRRRs.

On the fiscal front, the government frontloaded capital expenditure and reduced income tax and GST rates to bolster demand. These measures are already showing early impact: auto retail sales surged toward the end of September, with vehicle registrations rising 34% to 1.16 million units, driven by growth across passenger vehicles, two-wheelers, commercial vehicles, and tractors.

Also Read: Auto Sector Discounts To Trend Down As GST Cuts Set To Lift Demand: Motilal Oswal | Republic World

“Private capex typically follows consumption with a lag of two quarters,” said MOFSL analysts Tanisha Ladha and Radhika Piplani. “As domestic demand strengthens in 3QFY26, we expect a broad-based revival in investment activity across sectors.”

The report highlights that sectors such as power transmission and distribution, coal, telecom, oil and gas, ports, cement, airlines, defense, and electronics are already expanding capacities. These investments are being financed less by traditional bank credit and more through external borrowings, IPOs, QIPs, and corporate debt, reflecting structurally driven growth rather than cyclicality.

With the RBI’s recent policy easing for banks and NBFCs, credit flow is expected to accelerate further, potentially boosting planned capital expenditure. High-frequency indicators, such as auto registrations and dealer channel checks, will serve as early signals of the unfolding growth cycle.

Motilal Oswal concludes that India is entering a “turnaround phase,” with the combination of rebounding consumption, policy support, and private capex likely to sustain robust real GDP growth of 7–8% in FY26.