Synopsis: Global brokerages say India’s latest labour reforms, tax reset and regulatory easing could strengthen medium-term growth, even as trade shocks and AI disruption reshape the global economy. UBS, Nomura and Bernstein believe India is positioning itself for supply-chain gains, higher productivity and a more resilient manufacturing ecosystem.
Labour Reforms, Tariffs and AI Disruption — What Global Brokerages Are Saying About India
India’s recent push for structural reforms has triggered strong reactions from leading foreign brokerages including UBS, Nomura and Bernstein. The government’s notification of four new labour codes—consolidating 29 central laws—marks one of the biggest regulatory overhauls in decades, aiming to modernise working conditions, expand social-security access, and reduce compliance burdens.
Economists say the timing is significant, coming shortly after the shock 50% Trump tariffs, which disrupted India’s export outlook and forced a shift in policy priorities.
Nomura: Focus Shifts to Domestic Strengthening
Nomura noted that the government now appears focused on boosting domestic demand and building a more resilient, diversified manufacturing base. According to their assessment:
- GST slabs have been restructured soon after income-tax relief for the middle class
- Compliance for GST and tax filings has been reduced
- Legislation is underway to rationalise penalties and decriminalise business offences (including the Jan Vishwas Act, 2023 and a follow-up bill in 2025)
Nomura stated that labour reforms should be seen as part of a broader effort to cut red tape, increase ease of doing business, and support manufacturing-led growth.
However, it also cautioned that businesses may need support in adopting the new rules, and political pushback from trade unions could slow implementation.
UBS: India’s Structural Story Remains Intact
UBS said India is moving ahead with reforms even amid global trade uncertainty, tariff pressures and AI-driven disruption. It highlighted:
- GST rate rationalisation (September 2025)
- Deregulation measures
- Newly implemented labour reforms
UBS believes these changes lay strong groundwork for:
- higher productivity
- improved global competitiveness
- medium-term scaling of Indian firms
It also said India is well-positioned to benefit from global supply-chain realignment due to:
- a large domestic market
- affordable labour
- improving infrastructure
- stable macro conditions
- supportive policy environment
- possible US-India trade deal
UBS added that simpler compliance could attract more FDI in manufacturing, helping revive private capex.
Bernstein & JM Financial: Impact on Swiggy and Eternal
Brokerages also examined the effect on gig-based and quick-commerce platforms.
JM Financial estimated:
- Cost impact of ?2.1–?2.5 per order for Swiggy and Eternal
- Contribution burden of ?430 crore for Eternal and ?260 crore for Swiggy in FY26E
- Most of the added cost will likely be passed on to customers, with minimal change in ordering behaviour
Bernstein projected a 25–70 bps EBITDA hit, noting that:
- quick-commerce margins are more exposed than food delivery
- rider and warehouse expenses remain the largest variable costs
- existing insurance and benefits may soften the regulatory impact
Bernstein maintained an ‘outperform’ rating on both companies.
What the Reform Changes
The new labour framework drastically simplifies compliance:
- regulations reduced: 1436 ? 351
- registers: 84 ? 8
- returns: 31 ? 1
- licences: 4 ? 1
Rules under the four codes are expected within 45 days, with industry-related provisions likely active from April 1, 2026.
UBS said this should strengthen formalisation and ease of doing business, but rollout depends heavily on states. While 32 states and UTs have drafted rules, progress varies—West Bengal remains slower.
States that do not notify rules will automatically follow those finalised by the Centre.
Outlook
Despite global uncertainty, brokerages remain optimistic:
- reforms are seen as strengthening India’s medium-term growth path
- domestic-demand-led strategy may cushion trade shocks
- structural stability could support broader industrial expansion
More reforms are expected in the coming months as India accelerates its economic reset.
Disclaimer: This article is based on publicly available brokerage reports and economic commentary. It is intended for informational purposes only and should not be considered financial or investment advice.
