Nomura expects India’s growth trajectory to face a brief soft patch at the start of FY27 before regaining momentum later in the year, as supply-side constraints ease and policy support strengthens.
The brokerage noted that economic activity could slow in the first half of FY27, largely due to bottlenecks impacting manufacturing and services. However, resilient domestic demand is likely to act as a buffer, preventing any sharp downturn.
Nomura pegs GDP growth at around 6.3%–6.7% in the first half of the financial year.
Pickup likely in H2
Growth is expected to improve in the second half, with GDP projected at 7.1%–7.2%, driven by easing global pressures and the cumulative impact of earlier policy measures.
For FY27 as a whole, Nomura forecasts growth at about 6.8%, indicating that the slowdown is likely to be temporary rather than structural.
Drivers of recovery
The report highlights “Goldilocks” starting conditions—where inflation and growth remain balanced—as a key support factor. It also points to the lagged effects of previous policy easing, which are expected to feed into economic activity over time.
Improving trade dynamics with the United States could further aid exports and lift business confidence. On the domestic front, measures such as fuel tax cuts, export logistics support, and potential credit relief for MSMEs are seen as additional growth drivers.
External risks in focus
At the same time, Nomura cautioned that global uncertainties could pose risks. Ongoing tensions involving Iran remain a concern, particularly if they escalate and disrupt energy markets. Higher crude oil prices could add to inflationary pressures and impact corporate costs. While fuel price hikes have been on hold, any increase—especially after state elections—may weigh on consumption and growth.
Overall, the outlook suggests a near-term slowdown driven by supply challenges, followed by a recovery supported by steady demand and policy tailwinds, keeping India’s growth story broadly intact.
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