Dear Readers,

Back in school, when we read about the history of British India, few of us could have imagined how the relationship between the two nations would evolve. Today, the world has changed beyond recognition. The digital revolution has erased boundaries with people, ideas, and businesses now just a message or a call away.


Today, countries rely on each other for trade, and a seamless global supply chain is an integral part of every economy. That’s why it was a sight to behold when Mumbai’s iconic Sea Link lit up with the images of UK Prime Minister Keir Starmer and Prime Minister Narendra Modi. Across the city, posters welcome Starmer, who arrived in India’s financial capital on Wednesday evening, to participate in the Global FinTech Festival. He sampled Indian cuisine, joined pre-Diwali celebrations, and e ven tried a few dance moves, a warm and lively start to his maiden India visit.

Almost all the major BFSI leaders, including veterans like KV Kamath, were part of the Modi, Starmer conversation at the festival.In his address at the GFF, Starmer remarked that India is set to become the world’s third-largest economy by 2028, a statement as bold as it is significant, and perhaps a subtle counter to narratives questioning global economic momentum. The visit also saw both nations signing a $468 million missile deal, reinforcing strategic and trade ties. Starmer’s 125-member delegation showed the growing depth of this partnership. This is a significant strengthening of ties after the two countries signed a trade agreement this year and paves the way for much more such partnerships.


Reform momentum and India’s growth story

The UK PM’s confidence that the Indian economy is on track to achieve the Viksit Bharat goal by 2047 isn’t baseless. In recent weeks, the government has visibly stepped up its reform drive. From GST rationalisation to the launch of new policy measures, the agenda is clearly tilted toward growth and ease of doing business. The Finance Minister’s move to internationalise the rupee settlement system at GIFT City, the Prime Minister’s inauguration of the Navi Mumbai International Airport, a nd the completion of the Aqua Line of the Mumbai Metro are among several milestones reflecting that momentum.


Beyond the big headlines, smaller yet impactful initiatives, such as modernising a fish market in Odisha or opening a new skill development centre in Maharashtra, point to a broader intent: making growth more inclusive and regionally balanced.

But the larger question remains: How will these efforts translate into the India Inc growth story? As the world’s economic order shifts and partnerships evolve, India’s ability to sustain reform and deliver outcomes will define not just its trajectory, but also its standing in the global rankings.

Over the past few months, India has faced multiple headwinds, from geopolitical tensions to wars, leading to FII outflows of nearly $9 billion between July and September 2025. Domestically, urban consumption has remained muted due to high interest rates, tight liquidity, and the underperformance of key sectors like IT and banking.

To counter weakening demand, the RBI cut policy rates by 100 basis points to 5.5% and reduced the CRR by 150 basis points, adding liquidity of nearly Rs 9 lakh crore into the system through various operations. Simultaneously, the government frontloaded capex spending and reduced income and GST tax rates to spur demand.


Early signs are encouraging with auto sales hitting a record high in September 2025 and activity picking up across the sectors. These trends suggest that domestic momentum may be reviving, setting the stage for a pickup in private capital expenditure (capex) in the coming quarters.

Private capex typically follows consumption with a lag, and sectors such as power transmission, telecom, defence, oil and gas, and electronics are already expanding capacities. Interestingly, this new wave of investment isn’t being funded by bank credit but by IPOs, QIPs, and corporate bond issuances, a sign of growing market confidence.

The RBI’s recent regulatory easing for banks and NBFCs could accelerate credit flow, potentially fuelling the next phase of capital spending. For now, a close watch on auto registrations, retail sales, and high-frequency demand indicators will help track the economy’s pulse.


Earnings set to turn the corner

Corporate India may finally be entering an earnings upcycle with analysts expecting profits to rise in double digits in Q2, for the first time in six quarters. Softer input costs and wider margins are driving operating leverage, while GST and income-tax cuts, along with an expected monetary easing cycle, add to optimism.

Cyclicals are leading the rebound, with cement and metals showing triple- and double-digit growth. Encouragingly, small- and mid-caps are set to outperform large-caps, reflecting stronger domestic momentum. With inflation moderating and fiscal spending robust, Q2FY26 could well mark the point where India’s corporate earnings and economic sentiment move in tandem, signalling the start of a sustained recovery.

India’s structural story remains compelling: a young population, improving infrastructure, healthy banks, and an emerging manufacturing base. Yet, the final push must come from sentiment turning into action. The optimism is there; the risk appetite is not.

For India’s animal spirits to truly roar, the demand cycle set in motion by the government through tax and rate cuts should translate into investment and optimism into output. Only then will the country’s growth story match the scale of its ambitions. The ball is now in India Inc’s court.

Please share your feedback, suggestions if any. You can reach me on amol.dethe@timesinternet.in and follow me on LinkedIn here.

As usual, I am adding here the top 5 stories of the week, trust you will find them meaningful.
1.Audit committees failing to challenge management on asset impairment, NFRA warns
2.Arisinfra CFO targets 40–45% revenue growth in FY26, bets on contract manufacturing and tech-led efficiency
3.GST overhaul: Insurance agents, hotels, and publishers face rising costs due to ITC restrictions
href="https://cfo.economictimes.indiatimes.com/news/tax-legal-accounting/nfra-report-highlights-audit-committee-failures-in-asset-impairment-oversight/124330916" class="top-story-panel__link"> 4.RBI opens new financing avenues for India Inc; CFOs see tailwinds for growth and consolidation
5.GST 2.0 pass-through uneven: Packaged foods and medicines benefit more, electronics lag, survey shows

Happy Reading
Amol Dethe,
Editor,
ETCFO

(Editor's note is a column written by Amol Dethe, Editor, ETCFO. Click here to read more of his articles exploring several buzzing topics)

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