India-US Trade Deal To Be A Positive Surprise, Economy In 'Envious Spot': Nomura's Sonal Varma

The much-awaited India-US trade deal could likely be a 'positive surprise' for the markets and economy, according to Sonal Varma, Managing Director and Chief Economist (India and Asia ex-Japan) Nomura, Singapore. The lead economist also believes that India's economic indicators of high growth and low inflation makes it an 'envious spot' for other countries.

In an exclusive interaction with NDTV Profit on Dec. 10, Nomura's Varma said that India's imports of Russian oil is expected to come down as the sanctions are in effect. "The 25% additional penalty on India for buying Russian oil might be removed, given crude imports from Russia come down, which would result in lower tariffs," said the economist.

According to Varma, Indian economy's low deflators amplified the high GDP numbers in the second quarter of FY26. "2025 has been more about cyclical demand softness in India. India should close the 2025 calendar on a strong note with a GDP growth of 7.7%," said the economist.

For 2026, Nomura forecasts a GDP growth of 6.9%. Coming to inflation, the average for 2025 will be a ''shade above 2%'' and for 2026, Varma expects inflation to hit 3.5%. "Very low inflation in the economy is also not good for the agricultural and food producers, so some balance is important," she said.

Inflation will stay below 4% at least till October or November 2026, predicts Varma. With a GDP growth of 8.2% in Q2 and historically low headline inflation, the Indian economy is in an ''envious spot'', according to Varma. However, she adds that India's disinflation is due to many factors, such as low food inflation.

According to the brokerage, many central banks around the world are not following the US Fed's trajectory on interest rates. "If India's inflation stays benign, it will offer room for the RBI to ease further irrespective of what the US Fed does," said Varma. The predominant driver for the Indian economy in 2026 remains the domestic growth-inflation dynamic.

Varma believes that RBI's rate cutting cycle is not over, but the central bank now has the luxury to go a bit slower. "Our view is that the RBI may pause in February and cut rates by 25 bps in April 2026. However, RBI's bigger focus will be to ensure transmission and liquidity," she told NDTV Profit.

According to the economist, the India-US trade deal's announcement itself will be a positive surprise. However, going into 2026, Varma warns that the biggest challenge for India in the near-term is that ''we're not an AI story yet''.

However, "If easing monetary conditions leads to cyclical growth then India can get more equity inflows next year and there's also a potential for bond index inclusion," she added. "With flows returning and India's current account deficit staying around 1% of GDP, should mean that the balance of payments will be easily funded," she concluded.