India’s economic growth may slow in the early part of the next financial year before picking up pace later, as supply issues weigh on activity but demand remains steady, according to a report by Nomura.
The global brokerage expects growth to remain stable overall, even though some sectors may face pressure in the short term.
Nomura said the Indian economy is likely to
This is mainly due to supply-side challenges that could affect both manufacturing and services. Despite this, demand conditions are still seen as strong, which may prevent a sharper slowdown.
The report estimates that GDP growth could be in the range of 6.3% to 6.7% in the first half of FY27.
Growth is expected to improve in the second half of the financial year.
Nomura projects GDP growth of around 7.1% to 7.2% in the later part of FY27, supported by policy measures and easing global pressures.
For the full year, the brokerage has forecast growth at 6.8%.
The report points to a few factors that could help the economy recover.
These include what Nomura described as “Goldilocks starting conditions”, along with the delayed impact of earlier policy easing steps.
In addition, easing trade tensions with the United States could support exports and business sentiment.
The government has also taken steps such as fuel tax cuts, logistical support for exporters, and possible credit support for MSMEs, which may help growth.
However, risks remain, especially from global events.
Nomura warned that the ongoing conflict could have a wider impact if it continues for a longer period.
High oil prices are already putting pressure on oil companies and could affect inflation if fuel prices rise.
At present, fuel price increases have been paused, but any revision after state elections could add to inflation and slow down growth.
The report suggests that India’s economy is entering a phase where short-term challenges may affect growth, but underlying demand remains stable.
While supply disruptions and global risks may weigh on activity in the near term, policy support and improving conditions later in the year could help the economy recover.
For now, the outlook points to a temporary slowdown rather than a long-term decline.