Despite cost-cutting efforts, India Inc’s operating profit growth dipped to 9.9% in FY25—the slowest pace in the past four years. The subdued earnings performance comes on the back of a modest 6.2% rise in net sales, marking a second consecutive year of single-digit top-line growth.
The data relates to a universe of 3,035 companies, banks and financials. The topline growth drops to just 4.9% in 2024-25 if banks and financials are excluded from the sample.
Manufacturing companies benefited from stable commodity prices, which helped them manage raw material costs. However, firms also kept a tight lid on other expenses—particularly employee costs. In FY25, employee expenses rose just 7%, the slowest increase in four years. For comparison, the wage bill had gone up by 12.7% in FY24 and 16.8% a year before. The trend holds even when banks and financials are excluded. The employee bill went up by 7% in 2024-25, again the slowest rise in four years.
A deeper look into workforce trends shows that several large corporations are paring their headcount and that hiring in the IT sector has moderated. According to a study by Bank of Baroda (BoB), headcount growth slowed significantly to 1.5% in the year ended March 2024, down from 5.7% in the previous year, based on a sample of 1,196 companies.
An earlier BoB analysis found that total net employee additions across 2,975 companies during FY19–FY23 stood at just 930,000. This indicates a compound annual growth rate (CAGR) of 3.1% in workforce expansion over that period.
Economists also point to the poor performance of the country’s merchandise exports sector—especially segments such as gems and jewellery and leather– as a reason for slower job creation.
The cumulative value of merchandise exports in 2024-25 (April-March) was $437.42 bn, reflecting a negligible 0.08% increase over 2023-24, data from the commerce ministry showed. However, non-petroleum exports fared slightly better, rising 6% year-on-year to $374.08 billion.