Labour reforms, trade, tariff and AI disruption: What UBS, Nomura, Bernstein & others say
Nomura said the government’s focus seems to have shifted to encouraging domestic demand and laying the foundation for a more resilient manufacturing sector with a more diversified export base.
- Nov 25, 2025,
- Updated Nov 25, 2025 3:17 PM IST
Economists at foreign brokerages such as UBS and Nomura said the recent reform push boded well for India’s medium-term growth outlook. The remarks came after the government notified four new labour codes, consolidating 29 central laws. The move aimed to modernise labour regulations, expand social-security coverage and ensure gender-pay parity. It also promised stronger rights and safety provisions for women workers, a statutory right to minimum wages across organised and unorganised sectors, and lower compliance burdens for employers.
In the wake of the shock 50 per cent Trump tariffs, Nomura said the government’s focus seems to have shifted to encouraging domestic demand and laying the foundation for a more resilient manufacturing sector with a more diversified export base. Consequently, the government has hastened the pace of its economic reforms, it said.
"To boost domestic demand, the government announced a major reset of GST tax slabs, close on the heels of income tax relief for the middle class. The compliance burden attached to the GST and income tax has also been reduced, while the government is introducing legislation to decriminalise or rationalise offences and penalties in the course of doing business (Jan Vishwas (Amendment of Provisions) Act, 2023 followed by another similar bill in 2025). Therefore, the reform of labour laws should be viewed as part of a broader initiative by the government to reduce tax and compliance burdens, and in the process give a serious policy leg-up to manufacturing and domestic demand," Nomura said.
UBS said India has pushed for domestic structural reforms amid trade, tariff and AI disruption. India's structural story remains intact, it said.
The recent reform push by the government including GST rate rationalisation (in September 2025), deregulation and now labour reforms reinforces the groundwork for sustainable economic growth that could help drive increased productivity and help firms scale up globally over the medium term, UBS said.
"We think India stands a good chance of benefiting from global supply chain shift in the medium term, with the right policy support, a likely US-India trade deal and given its own potentially favourable conditions (a large domestic market, a cheap labour force, improving infrastructure, government incentives and policy support, and a mostly favourable international image). On the broader question of job creation, we believe a simpler compliance regime would help in attracting new FDI, particularly in manufacturing sector. India's macro economic stability, regulatory easing and lower cost of capital would also create conducive conditions for broad-based private corporate capex recovery," it said.
For firms, these reforms should ease compliance burden, although cost of hiring labour may rise, Nomura said. "In the short term, businesses will need hand-holding to comply with these new laws and the government will need to navigate the political pressure from trade unions, which are opposed to this revamp. We expect more reforms to be announced in the coming months," it added.
Kotak Institutional Equities said platform companies (such as Eternal and Swiggy) will need to contribute to a social security pool, which will be used to provide social security benefits to gig workers. A central minimum wage, higher than the current minimum wage, may have an impact on wage bills for employers across sectors, it said.
"We estimate that in the worst-case scenario the amount payable by hyperlocal delivery companies under our coverage, including Eternal and Swiggy, would be Rs 2.1-2.5 per order in their respective food delivery and quick commerce businesses," said JM Financial. It has a 'buy' rating on Eternal with a target price of Rs 450, while an 'add' rating on Swiggy with a target price of Rs 460.
At a consolidated level, Eternal and Swiggy would have to contribute Rs 430 crore and Rs 260 crore, respectively, towards the fund, basis FY26E, it added. "We strongly believe both companies would eventually pass on the additional burden to their end customers. From a customer view, we do not expect any material impact on ordering behaviour, based on recent absorption of other fees.
Bernstein said that the new labour code may reduce Swiggy & Eternal Ebitda by 25-70 basis points (bps) and quick commerce margins are more exposed than food delivery. Rider and warehouse costs remain the largest variable expense per order, while existing insurance and benefits may offset part of the regulatory impact. Swiggy's food delivery is already unit-profit at (Rs 13 per order) and Blinkit/Eternal has higher revenue per order but also higher delivery costs, it noted, adding increased cost be shared across ecosystem partners and the industry may adjust pricing or fees to absorb incremental cost. Bernstein has an 'outperform' rating on both Swiggy and Eternal.
The new labour reform reduces the number of regulations from 1436 to 351, 84 registers to 8, 31 returns to 1 , 4 licenses to 1 and simplifies compliance procedures. The rules pertaining to the four codes, and other clauses will be notified in the next 45 days. Some of the provisions of the codes that relate to the industry may come into effect from April 1, 2026. UBS said these labour reforms measures should reinforce 'ease of doing business' and encourage formalisation.
"Although the labour laws received parliamentary approval in 2020, the government was not able to implement the laws uniformally across the country due to political pushback and opposition from some trade unions. However, the Centre engaged meaningfully with states, resulting in 32 states and UTs releasing draft rules under the Codes. As many as 18–25 states have already incorporated many provisions of the Labour Codes even before they were notified. Some states, however, have made slower progress including West Bengal. The successful rollout of the new laws, therefore, depends on how effectively states adopt them. States that do not notify the rules will have to follow those finalised by the Centre as labour falls under the concurrent list," UBS said.
Economists at foreign brokerages such as UBS and Nomura said the recent reform push boded well for India’s medium-term growth outlook. The remarks came after the government notified four new labour codes, consolidating 29 central laws. The move aimed to modernise labour regulations, expand social-security coverage and ensure gender-pay parity. It also promised stronger rights and safety provisions for women workers, a statutory right to minimum wages across organised and unorganised sectors, and lower compliance burdens for employers.
In the wake of the shock 50 per cent Trump tariffs, Nomura said the government’s focus seems to have shifted to encouraging domestic demand and laying the foundation for a more resilient manufacturing sector with a more diversified export base. Consequently, the government has hastened the pace of its economic reforms, it said.
"To boost domestic demand, the government announced a major reset of GST tax slabs, close on the heels of income tax relief for the middle class. The compliance burden attached to the GST and income tax has also been reduced, while the government is introducing legislation to decriminalise or rationalise offences and penalties in the course of doing business (Jan Vishwas (Amendment of Provisions) Act, 2023 followed by another similar bill in 2025). Therefore, the reform of labour laws should be viewed as part of a broader initiative by the government to reduce tax and compliance burdens, and in the process give a serious policy leg-up to manufacturing and domestic demand," Nomura said.
UBS said India has pushed for domestic structural reforms amid trade, tariff and AI disruption. India's structural story remains intact, it said.
The recent reform push by the government including GST rate rationalisation (in September 2025), deregulation and now labour reforms reinforces the groundwork for sustainable economic growth that could help drive increased productivity and help firms scale up globally over the medium term, UBS said.
"We think India stands a good chance of benefiting from global supply chain shift in the medium term, with the right policy support, a likely US-India trade deal and given its own potentially favourable conditions (a large domestic market, a cheap labour force, improving infrastructure, government incentives and policy support, and a mostly favourable international image). On the broader question of job creation, we believe a simpler compliance regime would help in attracting new FDI, particularly in manufacturing sector. India's macro economic stability, regulatory easing and lower cost of capital would also create conducive conditions for broad-based private corporate capex recovery," it said.
For firms, these reforms should ease compliance burden, although cost of hiring labour may rise, Nomura said. "In the short term, businesses will need hand-holding to comply with these new laws and the government will need to navigate the political pressure from trade unions, which are opposed to this revamp. We expect more reforms to be announced in the coming months," it added.
Kotak Institutional Equities said platform companies (such as Eternal and Swiggy) will need to contribute to a social security pool, which will be used to provide social security benefits to gig workers. A central minimum wage, higher than the current minimum wage, may have an impact on wage bills for employers across sectors, it said.
"We estimate that in the worst-case scenario the amount payable by hyperlocal delivery companies under our coverage, including Eternal and Swiggy, would be Rs 2.1-2.5 per order in their respective food delivery and quick commerce businesses," said JM Financial. It has a 'buy' rating on Eternal with a target price of Rs 450, while an 'add' rating on Swiggy with a target price of Rs 460.
At a consolidated level, Eternal and Swiggy would have to contribute Rs 430 crore and Rs 260 crore, respectively, towards the fund, basis FY26E, it added. "We strongly believe both companies would eventually pass on the additional burden to their end customers. From a customer view, we do not expect any material impact on ordering behaviour, based on recent absorption of other fees.
Bernstein said that the new labour code may reduce Swiggy & Eternal Ebitda by 25-70 basis points (bps) and quick commerce margins are more exposed than food delivery. Rider and warehouse costs remain the largest variable expense per order, while existing insurance and benefits may offset part of the regulatory impact. Swiggy's food delivery is already unit-profit at (Rs 13 per order) and Blinkit/Eternal has higher revenue per order but also higher delivery costs, it noted, adding increased cost be shared across ecosystem partners and the industry may adjust pricing or fees to absorb incremental cost. Bernstein has an 'outperform' rating on both Swiggy and Eternal.
The new labour reform reduces the number of regulations from 1436 to 351, 84 registers to 8, 31 returns to 1 , 4 licenses to 1 and simplifies compliance procedures. The rules pertaining to the four codes, and other clauses will be notified in the next 45 days. Some of the provisions of the codes that relate to the industry may come into effect from April 1, 2026. UBS said these labour reforms measures should reinforce 'ease of doing business' and encourage formalisation.
"Although the labour laws received parliamentary approval in 2020, the government was not able to implement the laws uniformally across the country due to political pushback and opposition from some trade unions. However, the Centre engaged meaningfully with states, resulting in 32 states and UTs releasing draft rules under the Codes. As many as 18–25 states have already incorporated many provisions of the Labour Codes even before they were notified. Some states, however, have made slower progress including West Bengal. The successful rollout of the new laws, therefore, depends on how effectively states adopt them. States that do not notify the rules will have to follow those finalised by the Centre as labour falls under the concurrent list," UBS said.