 "Illustration: Ajaya Mohanty")
The value of aggregate new orders rose ahead of escalating geopolitical tensions and fresh tariffs on India.
Orders worth ₹59,755 crore came in across 158 companies in July, according to data from the Centre for Monitoring Indian Economy (CMIE). This is 29.1 per cent higher than the ₹46,297 crore worth of orders recorded in July 2024. The rise came just before the US imposed an additional 25 per cent tariff — on top of the earlier 25 per cent levy — taking the aggregate tariff on Indian exports to as high as 50 per cent. The new tariff became effective on August 27.
Higher order flow is often seen as a sign of improving economic activity.
But the tariff shock could dampen this buoyancy and slow private capital expenditure.
Export-oriented sectors such as textile and gems and jewellery may feel the pinch, while relatively insulated industries could continue to add capacity. Government investments, however, are unlikely to be affected, said market veteran U R Bhat, cofounder and director at Alphaniti Fintech. “Tariffs are not across the board,” he observed.
There are no duties on semiconductors, electronics, and pharmaceuticals, among others, according to an August 27 Asia Insights note from Nomura. But finished automobiles and parts attract 25 per cent duties, while steel, aluminium, and copper face the full 50 per cent.
Nomura recently trimmed its gross domestic product (GDP) growth forecast to 6 per cent for 2025-26 (FY26) from 6.2 per cent earlier. The 0.2 percentage point (pp) downgrade is largely tariff-driven, analysts Sonal Varma and Aurodeep Nandi wrote.
“This assumes the penalty stays for only three months. In a bad scenario, where tariffs remain at 50 per cent levels throughout FY26, the hit to GDP would be closer to 0.4 pp in FY26 or 0.8 pp on an annualised rate basis,” the note said.
A shift away from imports and towards domestic consumption of goods currently exported could cushion the blow, EY said in its August 2025 Economy Watch report. “With suitable policies, the US tariff impact can be reduced to about 0.1 per cent of GDP, implying at best, a reduction of 10 basis points,” it said.
Lower taxes could also aid domestic demand by putting more money in consumers’ hands, suggested independent market expert Ambareesh Baliga. That, in turn, could benefit sectors such as fast-moving consumer goods and help revive the private capital expenditure cycle. In the interim, public spending may have to take the lead, he added.
“Government may have to continue to do the heavy lifting,” Baliga said.
Government intervention in the form of economic support for key industries could also emerge as an investment driver, he added.
“The impetus on infrastructure modernisation and defence production will continue,” Bhat said.
A segment-wise breakup of order flow shows industrial and infrastructural construction has grown faster than overall orders, with order value up 117.9 per cent year-on-year. Machinery orders, however, fell.
Afcons Infrastructure secured ₹11,500 crore worth of orders, mostly from overseas, according to CMIE. Other large wins included Keystone Realtors (₹4,521 crore) and NCC (over ₹3,000 crore). The post-election cycle in 2024 may also have contributed to a favourable base effect, CMIE added.
