Tariff Deal with US to Bring Stability for India: Manishi Raychaudhuri

Quick Summary:

• Veteran investor Manishi Raychaudhuri emphasizes the importance of ASEAN-India tariff deals, comparing them to recent US agreements with Vietnam, Indonesia, Japan, and the UK.
• India currently has an interim 10% tariff deal valid until August 1; a final agreement similar to Japan’s 15% tariff would be ideal.
• Policy certainty regarding tariffs is viewed as critical for fostering investment decision-making and reducing fluctuations in the market surroundings.
• Emerging markets have shown improved sentiment spurred by fiscal and monetary stimulus capability and declining inflation levels (0-2% CPI in Asia).
• A depreciating US dollar (10% drop this year) serves as a tailwind for emerging markets alongside easing valuation premiums that make countries like India attractive to global investors.

Indian Opinion Analysis:

The potential conclusion of a US-specific tariff deal with India could usher in greater investment stability by eliminating policy uncertainty. The interim nature of existing tariffs disrupts long-term economic planning. If India secures terms akin to Japan’s rates, it may unlock favorable trade dynamics while showcasing India’s position amid other emerging economies.

Emerging markets’ ability to deploy both fiscal and monetary stimulus due to lower inflation aligns well with India’s current macroeconomic setup. Though, key growth opportunities rely not only on establishing firm trade policies but also on stabilizing earnings estimates for competitive positioning relative to peers like Korea or Taiwan.

Maintaining attractiveness for international investments necessitates balancing short-term corrections with efforts at reducing valuation risks further amidst global currency shifts.Read More