Five challenges that confront India Inc converge to raise one big question that resets the bar

Commodity volatility has gone cross-sectoral: One theme unites every boardroom: commodity price volatility, with its mentions rising 32% quarter-on-quarter.

What was once the preserve of oil, gas and metals has spread. Fast-moving consumer goods (FMCG) companies are flagging fluctuations in soya, palm, wheat and sunflower oil as actively influencing consumer choices and margins.

Construction firms cite raw material costs as their top concern. In consumer electricals, copper price swings are hurting gross margins. In the metals sector, steel demand is described as rising on the back of infrastructure growth. Yet, margin predictability is elusive as input costs swing sharply in the opposite direction.

Companies are responding through a mix of procurement re-negotiation, hedging and a pivot to renewable energy (though more as a hedge against fuel and raw material price volatility than as a sustainability measure).

AI is no longer just a tech conversation: Its mentions grew 12% quarter-on-quarter. Building materials and healthcare recorded these for the first time as sectors. Financial services saw a 400% jump and retail 240%. Cement companies are deploying AI-enabled central control systems. Logistics firms are using Agentic AI to automate documentation. In retail, AI has moved into the top three discussion topics alongside market growth and consumer confidence.

Geopolitical flux: Trade policy mentions held steady, but the conversation has grown sharper and more sector-specific. The European market offers an illustration of how the same geopolitical development can register as a threat or an opportunity depending on how a company is placed.

For exporters of automotive components and industrial machinery, soft European demand and new tariff structures are pressuring margins. For Indian specialty chemicals and pharmaceutical firms, the picture is reversed, with plant shutdowns among European competitors opening supply gaps for them to fill.

Meanwhile, the phased implementation of the India-EU trade pact is expected to create export pathways for textiles, building products and specialty manufactures. As one textile management team noted, tariff reductions have created “immediate and ongoing opportunities to increase exports and margins.”

For Indian businesses with European exposure, the right response depends on which side of this bifurcation they are.

Premiumization as a margin strategy: Consumer behaviour mentions rose a modest 2% quarter-on-quarter, but premiumization—a strategic shift to higher-value products—has emerged as one of the most broadly deployed responses to cost pressure. It features across sectors.

An FMCG leader described the business as seeing “strong tailwinds driven by consumer megatrends, which will drive consumption.” In electricals, the focus on energy-efficient premium products is described as “driving revenue growth and margin resilience.”

In decorative paints, a premium turn is being used to defend margins against intensifying price competition from new entrants. As input costs rise and volume growth moderates, moving up the value chain has become the most accessible route to margin protection.

Inflation is back: The sharpest quantitative signal this quarter is a 45% jump in inflation-related mentions, the largest increase among all themes. While inflation had receded from its earlier peaks, cost pressures did not.

Industrial product companies cite persistent input cost inflation as a problem; one leader acknowledged that while inflation moderated and rural demand is showing early signs of recovery, the underlying cost environment remains challenging.

In financial services, the conversation has moved downstream—to consumer credit quality, discretionary spending behaviour and the pace of the economy’s recovery.

What unites these five themes is that none of them is temporary. Commodity volatility, AI disruption, geopolitical fragmentation, shifting consumer behaviour and inflationary cycles are structural features of the operating environment, not cyclical blips. Moreover, emerging countries are facing a greater burden of current volatility, making it harder for Indian companies and business leaders to navigate today’s circumstances.

Addressing these challenges silo by silo could prove pointless. The companies that will emerge strongest from this environment will be those that treat these forces as interconnected dimensions of global mega trends that must be tackled by answering a single strategic question: how to build a business that grows sustainably in a world of permanent volatility.

The authors are, respectively, co-founder, Kanvic Consulting, and professor, Management Development Institute Gurgaon.