A statistic doing the rounds is that, at the current rate of profit growth, the taxes paid by Samsung and SK Hynix will be around $430 billion over the next three years, almost equal to half of South Korea’s national debt. Back home, amid the doom and gloom, two news items sparked hopes for our ability to build globally competitive giants. In early April, it was reported that Amul had become India’s first FMCG firm to hit a turnover of Rs 1 trillion. Then came news that RIL had become the first Indian company to cross $10 billion in profits.
India had 35 companies with a turnover of over Rs 1 trillion in FY25. However, only one has crossed $10 billion in profits, a watershed moment for the Indian corporate sector. The US and China boast of dozens of such firms, and Japan has multiple companies consistently above this threshold.
A few questions come to the fore. How important is it to have large firms with big profit pools? Does this divergence between topline and bottom line in terms of scale point to any structural issue? Is there an issue of “economic populism” or anti-big-business sentiment that views profits negatively?
The history of economic development suggests large, well-governed companies have been among the most reliable engines of productivity and innovation, creating the economies of scale necessary to compete on the global stage and raise living standards.
Let us start with productivity. Large firms spread fixed costs, such as those of R&D, compliance and digital infrastructure, across vast output, driving down unit costs and raising efficiency. Innovation, too, is often scale-dependent. Breakthroughs require patient capital, tolerance for failure and multidisciplinary talent — attributes concentrated in large enterprises. The US technology sector illustrates this vividly. Global competitiveness follows from this capacity to invest and integrate. Large firms build brands, control distribution, and orchestrate cross-border supply chains. They shape standards and capture value in global markets. They are significant direct employers and their larger contribution is often indirect: Dense supplier ecosystems, service providers and downstream distribution channels. They also contribute with higher wages.
As for the structural issue, India’s corporate story should not be viewed only through the lens of scale via revenues. By that measure, India has made real progress: A growing cohort of firms now cross the Rs 1 trillion revenue mark and balance sheets are in their best-ever shape after years of deleveraging. Yet beneath this success lies an asymmetry that deserves closer attention. India has built large companies. But not enough that are globally dominant, innovation-led and embedded in the highest-margin segments of the world economy.
Three features define this gap.
First, Indian firms tend to scale domestically rather than globally. The home market is large and has been a powerful growth engine. Many firms have leveraged this demand to build formidable positions across sectors. But global revenue exposure remains limited outside a narrow band of sectors, notably IT services, pharma and to an extent auto and oil products. Even here, the model is largely export-oriented services, assembly or re-exports rather than ownership of products, platforms or patents. In contrast, the world’s most valuable companies, from Apple to Toyota, derive strength from global market share, cross-border supply chains and pricing power built on brand and intellectual property.
Second, India’s corporate profit pool is still unusually concentrated in finance and commodities finance. Financials and commodity majors account for a disproportionate share of aggregate profits with profit after tax contribution at 41 per cent and 19 per cent respectively. This is not unique to India, but the skew is more pronounced. These sectors are capital-intensive and often cyclical, with returns shaped by global price movements or credit cycles rather than sustained innovation. In advanced economies, a larger share of profits accrues to technology, pharmaceuticals and advanced manufacturing, sectors where firms command durable margins through intellectual property and network effects.
Third, India’s presence in high-margin, innovation-driven sectors remains negligible. There are few domestic equivalents of frontier firms like NVIDIA that dominate critical nodes of the global technology stack. India’s digital economy has produced successful platforms, but most are domestically focussed and operate in intensely competitive, low-margin environments. Global rents in software, semiconductors and advanced industrials continue to accrue to firms headquartered elsewhere.
This divergence is not simply a matter of top-down policies or corporate strategy; it also reflects fundamental conditions. India’s R&D spending, at sub-1 per cent of GDP, lags far behind that of peers. Access to patient risk capital, particularly for deep-tech ventures, remains constrained. Regulatory uncertainty and fragmented factor markets raise the cost of scaling across states and sectors. And while India has integrated into global trade, it is yet to fully embed itself in the most lucrative segments of global value chains.
India’s development journey is entering a new phase amid a fast-changing global backdrop. The next leap, jobs creation at scale and flow of investments, will come not from incremental growth but from creating many profitable firms. Hopefully, we have travelled some distance from the Economic Survey 2017-18 — which observed that the country had shifted “from crony socialism to stigmatised capitalism” — so that profit isn’t a dirty word and businesses are not perpetually viewed with suspicion that hinders reforms and erodes investment sentiment.
To power India’s transition to a high-income economy, we need dozens more such domestic champions with the scale, ambition, and execution depth that earn more than $10 billion in profits. The Korean examples above or the US Magnificent 7 are cases in point. India doesn’t just need start-ups, it needs “scale-ups” that become global giants with large profit pools. The real question that needs answering by policymakers and corporates is then: Are we optimising for scale (only via revenues) or global competitiveness (profits plus pricing power)?
The writer is group chief economist, L&T. Views are personal
India had 35 companies with a turnover of over Rs 1 trillion in FY25. However, only one has crossed $10 billion in profits, a watershed moment for the Indian corporate sector. 
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