India to benefit from supply-chain shifts due to ongoing tariff tensions: Nomura

India will be among the first Asian countries to sign a trade deal with the United States, enabling it to lower its reciprocal tariff to 10%, which is below the tariff rate on China, according to Nomura.

“This should provide India with a tariff advantage over its competitors, leading to benefits from trade diversion and supply-chain shifts,” the rating agency said on Tuesday. India will be a “key beneficiary” of the ongoing supply-chain shifts, it added.

The US imposed a tariff of 26% on Indian imports in April. India is currently negotiating a trade deal with the US. The US commerce secretary Howard Lutnick on Monday said that a trade deal between two countries could be reached in the "not-too-distant future".


Negotiations with Japan, Korea and Taiwan are also progressing well, said Nomura.

India’s gross domestic product (GDP) grew to a four-quarter high of 7.4% in Q4 of FY25, leading to a full-year growth of 6.5%, according to official data released last week.

Nomura projects GDP growth of 6.2% for FY26, higher than the earlier forecast of 5.8% and below the Reserve Bank of India’s (RBI) forecast of 6.5%.

“We expect India to outperform its more open Asian peers during the current cycle, given its more domestic demand-driven economy,” it said.

On the inflation front, the rating agency projects a subdued 3.3% in FY26 compared to 4.5% in FY25.

A strong winter crop output, lower pulses inflation due to higher supply, lower agricultural input costs and potentially favourable monsoon should reduce food inflation, according to Nomura.

It expects the central bank’s monetary policy committee (MPC) to deliver 100 basis points of rate cuts to a terminal rate of 5% this year, with 25bps cuts in each June, August, October and December meeting. The MPC is set to meet next from June 4 to 6.