India corporate sector shows sales growth amid rising inflation

India's private corporate sector is showing strong momentum in Q1 FY27, characterized by accelerating sales and operating profit growth. According to data from the Reserve Bank of India (RBI) covering 3,247 listed non-government non-financial companies, aggregate sales growth rose to 19.4 per cent year-on-year, up from 13.9 per cent in the previous quarter.

Key drivers of this growth include the manufacturing sector, which saw sales expand by 21.4 per cent, particularly in the automobile, petroleum, and electrical machinery industries. The IT sector also reported increased momentum, with sales growth rising to 14.8 per cent. While non-IT services maintained double-digit growth, companies face ongoing challenges from elevated input costs and global supply-chain disruptions.

Compounding these operational challenges is a rising inflationary environment. Consumer Price Index (CPI) inflation has trended upward through 2026, reaching 4.45 per cent by July 2026, with food inflation exceeding 5.5 per cent. This inflationary pressure complicates financial reporting, as historical-cost accounting may lead to understated asset values, overstated profits due to depreciation distortions, and complexities in managing inventory and cost of goods sold.