Nomura projects India growth dip at start of FY27, recovery expected afterward

Nomura has projected a temporary slowdown in India’s economic growth at the start of FY27, with a recovery expected in the latter half as supportive conditions kick in.

According to the global brokerage, growth is likely to soften in the first half of the financial year due to supply-side constraints affecting both manufacturing and services. However, steady domestic demand is expected to cushion the impact and prevent a sharper deceleration.

Nomura estimates GDP growth in the range of 6.3% to 6.7% during the first half of FY27.

Recovery expected in second half

The report indicates that growth momentum should improve later in the year. GDP is projected to rise to around 7.1%–7.2% in the second half, aided by policy support and a more favourable global environment.

For the full financial year, Nomura has pegged India’s growth at approximately 6.8%, suggesting overall stability despite near-term pressures.

What could drive the rebound

Nomura highlighted several factors that could support a recovery. It pointed to “Goldilocks” starting conditions—characterised by balanced inflation and growth—as well as the lagged benefits of earlier policy easing measures.

Easing trade frictions with the United States could also boost exports and improve business sentiment. Additionally, government measures such as fuel tax cuts, logistical support for exporters, and potential credit assistance for MSMEs are expected to provide a tailwind to growth.

Global risks remain a concern

Despite the positive outlook for the second half, external risks continue to loom. Nomura flagged the ongoing tensions involving Iran as a key uncertainty, particularly if the situation escalates or persists.

Elevated crude oil prices remain another concern, as they could feed into inflation and impact corporate margins. While fuel price hikes have been paused for now, any revisions—especially after state elections—could add pressure on inflation and weigh on growth.

Overall, the report suggests that India’s economy is entering a phase of short-term moderation rather than a prolonged slowdown. While supply disruptions and global uncertainties may dampen activity in the near term, resilient demand and policy support are expected to drive a recovery in the second half of FY27.