Corporate India continues to report anaemic growth in its topline. Partial data suggest that net sales grew by about 7.5 per cent in the quarter ended December 2025 compared to the corresponding quarter a year ago. This would be the eleventh consecutive quarter of single digit growth in sales.
The sustained single-digit year-on-year (y-o-y) growth in sales suggests that the reduction in goods and services tax (GST) effective from 22 September 2025 has not made a big difference to the pace of expansion of sales of the corporate sector.
However, there are two reasons to believe that the reduction in GST could have made a difference to the growth in sales. First, the quarter-on-quarter (q-o-q) growth rates suggest an increase in the rate of growth of net sales of non-finance companies. Second, inflation- adjusted growth rates show acceleration. Besides, we look for the impact on non-finance companies which were expected to see the impact of the tax changes more than financial services companies.
Net sales of non-finance companies grew by 8.2 per cent y-o-y in the December 2025 quarter. This was the highest rate of increase in the past eleven quarters. The growth rate is nearly twice the 4.3 per cent growth in December 2024 and also higher than the 6.8 per cent growth in the preceding September 2025 quarter.
The improvement in the non-finance sector is better seen in the increase in sales over the previous quarter. Quarter on-quarter (q-o-q), the growth in net sales of non-finance companies was 6 per cent. This is significantly higher than the 2 per cent average q-o-q growth seen in the preceding three December quarters.
Y-o-y changes reflect the impact of factors of all the preceding four quarters. Q-o-q changes reflect factors only of the preceding quarter and are not confounded by the factors of the earlier quarters. Thus, q-o-q changes are more appropriate in studying the impact of a change in indirect tax rates that were implemented just before the quarter. To overcome possible seasonal effects, we compared the December 2025 quarter’s results with the results of the preceding three December quarters, i.e. the quarters ended December 2022, December 2023 and December 2024. These are the three quarters since the Covid-shock of 2020.
Net sales of manufacturing companies grew q-o-q by 6.7 per cent which is significantly higher than the average 1.5 per cent q-o-q growth seen in the preceding three December quarters.
Within the manufacturing sector, it is the industries that gained the most from the GST cuts that have reported better sales growth numbers. The December 2025 q-o-q sales of consumer goods companies were 13 per cent higher, while the 3-year average q-o-q growth in the December quarter was almost half of this, at 7.2 per cent. Passenger vehicles sales accelerated from a 3-year average of -4 per cent in December quarters to 13 per cent q-o-q growth in the December 2025 quarter. Cement sales accelerated from 8.4 per cent to 10.7 per cent by a similar comparison. And, machinery sales shot up from an average of 3.2 per cent to 13 per cent.
It is possible that the GST cuts have worked for these industries. But, it did not work for food products companies and textiles companies. These continued to report slow growth rates.
Further, non-financial services companies collectively delivered a q-o-q sales growth of 4.2 per cent in the December 2025 quarter, which is only slightly better than the three-year average December quarter q-o-q growth of about 3 per cent.
The impact of the GST cuts was evident only in a few industries while the others continued to grow at a slow pace.
Inflation was exceptionally low at 0.8 per cent in the December 2025 quarter. This contributed to the nominal sales growth remaining modest as it did not get inflated just by price inflation. The inflation-adjusted (real) net sales growth in the December 2025 quarter, y-o-y, was 8.3 per cent, which is a tad higher than the 8.2 per cent pencilled in nominal terms. The real growth for the manufacturing sector was much higher at 11.2 per cent compared to the 9.4 per cent in nominal terms. This is the highest real growth of net sales of manufacturing companies in 14 quarters, i.e. since the quarter ended September 2022.
The above analysis is based on a sample of a little over 1,240 listed companies that have published their financial statements for the quarter ended December 2025 so far. These are about 26 per cent of the total number of listed companies that usually publish their quarterly financial statements. But, these 1,240 companies account for about 59 per cent of the total sales of such companies. The sample includes the larger companies in relatively larger numbers but the smaller companies are also represented in the sample.
As the sample expands in the next ten days, the estimates presented above may undergo changes. But, it is unlikely that the broad message of continued tepid growth in net sales of listed companies and the positive impact of GST cuts on select industries would change materially.
