India's Exports Hit by Iran War and Tariffs
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 hours ago
0mins
Source: CNBC
- Significant Export Decline: India's merchandise exports fell to $38.9 billion in March, a drop of over 7% year-on-year, indicating that hopes for recovery are dashed under the dual pressures of U.S. tariffs and the Iran war.
- Key Markets Affected: Exports to the UAE plummeted nearly 62%, while shipments to the U.S. dropped 21%, reflecting widespread weakness across critical export categories such as agriculture, textiles, and chemicals, which negatively impacts overall economic performance.
- Tariff Impact Intensified: For the financial year ending March 2026, India's goods exports grew by less than 1% to $441.78 billion, primarily hindered by the severe drag of 50% U.S. tariffs in effect from August last year, despite a reduction to 18% in February this year.
- Pessimistic Future Outlook: Experts warn that Indian exporters face a
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About NMR
Nomura Holdings Inc is a Japan-based company mainly engaged in the securities, investment, and other financial services business across the world. The Company has three business segments. The Sales segment provides investment consultation services to individual clients in Japan. The Investment Management segment provides investment management services and investment solutions, including the establishment and management of investment trusts, discretionary investment services for domestic and foreign investors, fund management and administration for investment corporations and institutional investors, and silent partnership management. The Wholesale segment is engaged in the sale and trading of bonds, equity securities, derivatives, and foreign exchange, as well as investment banking services such as the bonds and securities underwriting business, merger and acquisition (M&A) business and financial advisory services. The Company operates in Japan, the Americas, Europe, Asia and Oceania.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
India's Exports Hit by Iran War and Tariffs
- Significant Export Decline: India's merchandise exports fell to $38.9 billion in March, a drop of over 7% year-on-year, indicating that hopes for recovery are dashed under the dual pressures of U.S. tariffs and the Iran war.
- Key Markets Affected: Exports to the UAE plummeted nearly 62%, while shipments to the U.S. dropped 21%, reflecting widespread weakness across critical export categories such as agriculture, textiles, and chemicals, which negatively impacts overall economic performance.
- Tariff Impact Intensified: For the financial year ending March 2026, India's goods exports grew by less than 1% to $441.78 billion, primarily hindered by the severe drag of 50% U.S. tariffs in effect from August last year, despite a reduction to 18% in February this year.
- Pessimistic Future Outlook: Experts warn that Indian exporters face a
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Federal Reserve Rate Cut Forecast Delayed to September 2026
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- Geopolitical Impact: The ongoing conflict in Iran has introduced new inflationary pressures into the U.S. economy, with volatile energy prices and supply chain disruptions prompting the Fed to prioritize price stability in the near term, thereby influencing its monetary policy decisions.
- Leadership Changes: The delayed confirmation of Kevin Warsh's nomination has reduced political pressure on the Fed for a mid-year rate cut; although the incoming leadership is expected to eventually prioritize easing, the current political vacuum justifies the Fed's restrictive stance through the summer months.
- Labor Market Response: Despite the delay in rate cuts, Nomura maintains that the Fed's underlying bias remains toward easing, as Chair Jerome Powell has shown a higher sensitivity to signs of labor market weakness, suggesting that once the leadership transition is finalized and labor market conditions cool further, the path for a September rate reduction will become clearer.
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India's Economic Growth Faces Downside Risks Amid Middle East Conflict
- Growth Forecast Downgrade: India's growth forecast for the fiscal year ending March 2027 has been adjusted down to 7.0%-7.4% due to rising energy costs and supply chain disruptions linked to the Iran war, which is expected to significantly increase the trade deficit and impact the current account deficit, potentially hindering economic recovery.
- Rising Energy Costs: India relies on the Strait of Hormuz for about 50% of its crude oil, with prices surging from $80 to $140, leading to increased domestic fuel prices; while the government has cut taxes to alleviate consumer burdens, tax revenues are likely to be adversely affected.
- Private Sector Activity Slowdown: The HSBC flash Purchasing Managers' Index indicates that private sector activity in India fell to its lowest level since October 2022 in March, reflecting weak domestic demand and heightened inflationary pressures, with businesses expressing pessimism about future growth.
- Policy Response Measures: The Indian government has implemented measures to reduce central excise duties on petrol and diesel to prevent price hikes while raising export duties on diesel and aviation fuel to ensure domestic supply, demonstrating a cautious approach in addressing the energy crisis.
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Toyota and Mitsubishi Financial Set to Surge: Reasons to Invest in Japanese Stocks.
- Investment Appeal: Japan is becoming an attractive destination for investment due to improving business conditions.
- Focus on Profits: Companies are increasingly prioritizing profits and returning cash to shareholders through dividends and buybacks.
- Impact of Currency: A weaker yen is contributing to enhanced earnings for exporters.
- Overall Economic Outlook: The combination of these factors is creating a more favorable environment for investors in Japan.
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India's IPO Market Faces Major Challenges Amid Global Volatility
- Market Volatility Impacting IPOs: The ongoing Middle East conflict has weakened investor sentiment, leading to a more than 12% drop in Indian benchmark indices since January, prompting companies like PhonePe to halt their listing plans and reflecting a sharp decline in demand for new stocks.
- Foreign Capital Withdrawal Intensifies: Foreign institutional investors have sold over $8 billion worth of equities this month, draining liquidity and making it difficult for IPOs to secure attractive valuations, resulting in several tech and consumer startups postponing their listings and further exacerbating market uncertainty.
- Significant Slowdown in IPO Activity: Since the outbreak of the Iran war on February 28, IPO activity has noticeably slowed; despite India having topped global charts with 367 IPOs in 2025, 8 out of 11 IPOs listed this year are trading below their issue price, indicating a lack of investor confidence.
- Domestic Investors Dominating Pricing: With foreign capital exiting, domestic institutional investors are firmly in control of IPO pricing, demanding “competitive” valuations, which may impact the market performance and fundraising capabilities of future IPOs.
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- Earnings Growth: For the nine months ending FY2023, Nomura Holdings reported a GAAP EPS of ¥94.67 and revenue of ¥1,590.53 billion, reflecting a 10.5% year-over-year increase, indicating strong performance in capital market services despite economic uncertainties.
- Lack of Earnings Forecast: Nomura Holdings refrained from providing earnings forecasts for the year ending March 31, 2026, due to uncertainties in global capital markets, which may affect investor confidence regarding the company's future profitability.
- Market Reaction: Despite the strong performance in the Japanese market making Nomura's stock appear cheaper, the uncertainty surrounding future earnings could lead to cautious investor sentiment, potentially impacting stock price volatility.
- Investor Engagement: At the Nomura Investment Forum 2025, the company showcased its strategic direction while supporting a crypto firm applying for a U.S. banking license, indicating an active positioning in emerging markets that could provide new growth opportunities.
See More
India's Exports Hit by Iran War and Tariffs
- Significant Export Decline: India's merchandise exports fell to $38.9 billion in March, a drop of over 7% year-on-year, indicating that hopes for recovery are dashed under the dual pressures of U.S. tariffs and the Iran war.
- Key Markets Affected: Exports to the UAE plummeted nearly 62%, while shipments to the U.S. dropped 21%, reflecting widespread weakness across critical export categories such as agriculture, textiles, and chemicals, which negatively impacts overall economic performance.
- Tariff Impact Intensified: For the financial year ending March 2026, India's goods exports grew by less than 1% to $441.78 billion, primarily hindered by the severe drag of 50% U.S. tariffs in effect from August last year, despite a reduction to 18% in February this year.
- Pessimistic Future Outlook: Experts warn that Indian exporters face a
See More
Federal Reserve Rate Cut Forecast Delayed to September 2026
- Rate Cut Delay: According to Nomura's latest report, analysts have pushed back the forecast for the Federal Reserve's first rate cut from June 2026 to September 2026, primarily due to geopolitical volatility and shifting leadership dynamics at the Fed, indicating a cautious market outlook on future monetary policy.
- Geopolitical Impact: The ongoing conflict in Iran has introduced new inflationary pressures into the U.S. economy, with volatile energy prices and supply chain disruptions prompting the Fed to prioritize price stability in the near term, thereby influencing its monetary policy decisions.
- Leadership Changes: The delayed confirmation of Kevin Warsh's nomination has reduced political pressure on the Fed for a mid-year rate cut; although the incoming leadership is expected to eventually prioritize easing, the current political vacuum justifies the Fed's restrictive stance through the summer months.
- Labor Market Response: Despite the delay in rate cuts, Nomura maintains that the Fed's underlying bias remains toward easing, as Chair Jerome Powell has shown a higher sensitivity to signs of labor market weakness, suggesting that once the leadership transition is finalized and labor market conditions cool further, the path for a September rate reduction will become clearer.
See More
India's Economic Growth Faces Downside Risks Amid Middle East Conflict
- Growth Forecast Downgrade: India's growth forecast for the fiscal year ending March 2027 has been adjusted down to 7.0%-7.4% due to rising energy costs and supply chain disruptions linked to the Iran war, which is expected to significantly increase the trade deficit and impact the current account deficit, potentially hindering economic recovery.
- Rising Energy Costs: India relies on the Strait of Hormuz for about 50% of its crude oil, with prices surging from $80 to $140, leading to increased domestic fuel prices; while the government has cut taxes to alleviate consumer burdens, tax revenues are likely to be adversely affected.
- Private Sector Activity Slowdown: The HSBC flash Purchasing Managers' Index indicates that private sector activity in India fell to its lowest level since October 2022 in March, reflecting weak domestic demand and heightened inflationary pressures, with businesses expressing pessimism about future growth.
- Policy Response Measures: The Indian government has implemented measures to reduce central excise duties on petrol and diesel to prevent price hikes while raising export duties on diesel and aviation fuel to ensure domestic supply, demonstrating a cautious approach in addressing the energy crisis.
See More
Toyota and Mitsubishi Financial Set to Surge: Reasons to Invest in Japanese Stocks.
- Investment Appeal: Japan is becoming an attractive destination for investment due to improving business conditions.
- Focus on Profits: Companies are increasingly prioritizing profits and returning cash to shareholders through dividends and buybacks.
- Impact of Currency: A weaker yen is contributing to enhanced earnings for exporters.
- Overall Economic Outlook: The combination of these factors is creating a more favorable environment for investors in Japan.
See More
India's IPO Market Faces Major Challenges Amid Global Volatility
- Market Volatility Impacting IPOs: The ongoing Middle East conflict has weakened investor sentiment, leading to a more than 12% drop in Indian benchmark indices since January, prompting companies like PhonePe to halt their listing plans and reflecting a sharp decline in demand for new stocks.
- Foreign Capital Withdrawal Intensifies: Foreign institutional investors have sold over $8 billion worth of equities this month, draining liquidity and making it difficult for IPOs to secure attractive valuations, resulting in several tech and consumer startups postponing their listings and further exacerbating market uncertainty.
- Significant Slowdown in IPO Activity: Since the outbreak of the Iran war on February 28, IPO activity has noticeably slowed; despite India having topped global charts with 367 IPOs in 2025, 8 out of 11 IPOs listed this year are trading below their issue price, indicating a lack of investor confidence.
- Domestic Investors Dominating Pricing: With foreign capital exiting, domestic institutional investors are firmly in control of IPO pricing, demanding “competitive” valuations, which may impact the market performance and fundraising capabilities of future IPOs.
See More
Nomura Holdings Reports FY2023 Earnings Performance
- Earnings Growth: For the nine months ending FY2023, Nomura Holdings reported a GAAP EPS of ¥94.67 and revenue of ¥1,590.53 billion, reflecting a 10.5% year-over-year increase, indicating strong performance in capital market services despite economic uncertainties.
- Lack of Earnings Forecast: Nomura Holdings refrained from providing earnings forecasts for the year ending March 31, 2026, due to uncertainties in global capital markets, which may affect investor confidence regarding the company's future profitability.
- Market Reaction: Despite the strong performance in the Japanese market making Nomura's stock appear cheaper, the uncertainty surrounding future earnings could lead to cautious investor sentiment, potentially impacting stock price volatility.
- Investor Engagement: At the Nomura Investment Forum 2025, the company showcased its strategic direction while supporting a crypto firm applying for a U.S. banking license, indicating an active positioning in emerging markets that could provide new growth opportunities.
See More
