Geopolitical tensions, trump trade war, cost-cuts and streamlined business operations plague IT sector
The IT sector has been outperformed by the banking and pharma industry’s growth in the first half of the year. Let’s explore the major market forces and growth opportunities of the Indian economy in 2025 that are driving this sectoral success.
Banking Sector Growth
The banking sector has seen a firm recovery with private sector banks like ICICI Bank, Kotak Mahindra Bank, etc performing better than the market. The shares of ICICI Bank have appreciated by 9% from January 21, 2025. The hike is due to strong quarter performance with good loan growth and improved asset quality. The bank reported a gross non-performing asset (GNPA) of 1.9%. It shows effective underwriting, strengthening its position in a cutthroat environment.
Despite challenges such as tightening liquidity and slowing loan growth, where credit expansion was at a three-year slump in 2024. However, the sector recovered slowly with cautionary optimism. The Reserve Bank of India (RBI) will raise the liquidity coverage ratio (LCR) in April 2025, which could have a short-term impact on credit growth but should stabilize in the long term. The banking industry’s ability to withstand shifting economic trends and its focus on technological advancements will be central to maintaining profitability in the face of such pressures.
Pharmaceutical Sector Growth
The pharma industry is expanding, going from an estimated US$58 billion in 2025 to between US$120 billion and US$130 billion in 2030. This is because of increased lifestyle diseases, an expanding population, and an expanding emphasis on overall health.
The Indian pharma industry is renowned globally for its production capabilities, ranking third in volume and 14th in value. It provides close to 20% of the generic medicines globally, and it is therefore referred to as the “Pharmacy of the World.”
Growth in artificial intelligence (AI) is also expected to lead to deep innovation in the sector, with AI set to account for 30% of new drug discovery by 2025. The convergence of technology is poised to cut costs and accelerate personalized therapy, which will contribute to the sector’s growth prospects even further. The welcoming investment regulatory environment for foreign direct investment (FDI) also leads India to become a sought-after destination for overseas investors seeking investment opportunities in the life sciences and healthcare sectors.
IT Industry Challenges
IT sector, however, is still recovering from previous downturns. While IT exports are forecasted to reach US$210 billion in FY 2025-26, the recovery is slower than in previous years. The industry faces uncertainty due to geopolitical tensions as well as fluctuating demand from prime markets like Europe and the US.
Despite a forecasted rise in IT employment opportunities of 15-20%. The high demand for specialized jobs such as AI and machine learning may not be enough to reverse the overall market decline. The new technology dependency of the IT sector will need to be balanced against economic pressures that would limit variable client expenditure.
Conclusion
The first half of 2025 has banking and pharma edging ahead of IT based on rapid strength and innovation. Banking is improving with better liquidity through good asset quality and technological adoption. The Pharma industry, on the other hand, is taking advantage of favorable population movements and tech trends.
IT, meanwhile, is working towards recovery. However, challenges like streamlined business operations for cost-cutting, and quick AI advancement are decreasing the other sectors’ dependence on the IT industry. It remains to be seen how the sector will adapt to these changing times and if a complete recovery is possible by the end of 2025.
