Nomura sees India's GDP growth moderate to 7.3% in Q4, 6.8% in FY27
This story was originally published at 22:40 IST on 27 April 2026
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NEW DELHI – India's GDP growth is likely to slow down on year in the March quarter and first half of financial year 2026-27 (Apr-Mar) due to the war in West Asia disrupting global supply chains, analysts at Nomura said in a report Monday. The brokerage revised down its estimate of India's GDP growth in FY27 by 20 basis points to 6.8%. However, they see growth recovering to a quicker pace in the second half of FY27.
The analysts estimate India's growth to moderate to 7.3% in Jan-Mar, from 7.8% on year in the December quarter, despite indicators showing resilient domestic demand so far. India's GDP is estimated to further slow to 6.3-6.7% on year in Apr-Sept due to the ongoing conflict in West Asia. Nomura's index on non-agricultural GDP growth remained robust at 100.5 for the June quarter, the same as it was for the March quarter.
"However, we are pencilling in a faster growth recovery in H2 FY27, to 7.1-7.2%, with overall GDP growth at 6.8% y-o-y in FY27, above consensus (6.4%)," economists Sonal Varma and Aurodeep Nandi said in the report.
Reserve Bank of India Governor Sanjay Malhotra had termed the Indian economy to be in a Goldilocks period of high growth and low inflation in February. The central bank forecasts GDP growth at 6.9% in FY27, higher than the International Monetary Fund's estimate of 6.5% and World Bank's projection of 6.6%.
In a base case scenario, Nomura said, the current supply chain shortages will constrain manufacturing and services, but the overall growth could hold up better than feared. "The Goldilocks 'starting conditions', lagged effects of policy easing and the calming of trade tensions with the US are important tailwinds," the report said.
The government measures to keep economic activity resilient will also cushion the adverse impact of the war in West Asia, which began on Feb. 28, according to the report. The Centre has offered targetted relief by reducing taxes on fuel, giving logistical support to exporters, with potential credit guarantees to affected small industries on the way. Nomura calculates the total fiscal impulse of these measures to be around 1.3% of GDP.
The analysts see a non-linear impact on India's growth if the supply chain disruptions last longer. If the war in West Asia persists and oil prices remain high, oil marketing companies in India will see higher under-recoveries, the analysts said. "Although the government has pushed back against a potential fuel price hike, any increase after the state elections (polling ends on 29 April, results wil be declared on 4 May) could intensify the inflationary pass-through to growth," the report said.
Crude oil prices touched a multi-year high of nearly $120 per barrel in March. Even as the oil prices have cooled from those levels, the price is still higher than the sub-$73 per barrel rate before the war. The government has taken various steps to prevent the high crude oil prices from being passed on to consumers, including cutting excise duty on petrol and diesel by INR 10 to INR 3 and nil, respectively. It also imposed export duties on diesel and aviation turbine fuel exports to ensure domestic availability.
Meanwhile, India aims to sign a bilateral trade agreement with the US soon. Officials from both countries met last week, the first meeting between officials from the two sides since February when the US Supreme Court scrapped the reciprocal tariff imposed by US President Donald Trump. Before the US court ruling, New Delhi and Washington had concluded trade talks under which the US had offered to lower the reciprocal tariff on India from 25% to 18%. The Trump-administration also scrapped the penal tariff on Indian goods following the conclusion of the agreement. End
US$1 = INR 94.19
Reported by Shweta
Edited by Deepshikha Bhardwaj
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