Jai Siya Ram
Key Forecast (Nomura)
- Current Status: The United States levied 50% tariffs on Indian exports—a combination of a 25% reciprocal tariff and an additional 25% penalty related to India’s continued purchase of Russian oil.
- Nomura’s Prediction: The extra 25% penalty is expected to be lifted by November, reducing the overall rate to 25% going forward. This base tariff is projected to remain in effect through FY2026.
- Macroeconomic Impact: Despite this expected relief, Nomura has revised India’s GDP forecast down to 6.0% from 6.2%—citing weaker exports, rising unemployment, and decelerated private investments.
- Monetary Outlook: The firm anticipates two repo rate cuts of 25 basis points each by the Reserve Bank of India, possibly in October and December, potentially taking the rate down to 5% by year-end.
Strategic Analysis
- Temporary Relief Insight: Removing the penalty tariff may restore some competitiveness to India’s exports, especially in textiles, jewelry, and other affected sectors.
- Lingering Pressure: A 25% base tariff remains significantly high compared to peers and will continue to strain trade performance and export-led industries.
- Policy Tailwinds: RBI easing could help buffer domestic shortfalls—especially in sectors impacted by tariff pressure.
