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How Donald Trump Became India’s New Best Friend · Trumponomics

0:02
Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. I would guess that
0:09
Speaker 1: India would be one of the first trade deals we
0:11
Speaker 1: would sign, So watch this space.
0:22
Speaker 2: I'm Stephanie Flanders, head of Government and Economics at Bloomberg.
0:25
Speaker 2: Welcome to Trumpnomics, the podcast that looks at the economic
0:28
Speaker 2: world of Donald Trump, how he's already shaped the global economy,
0:32
Speaker 2: and what on earth is going to happen next. This week,
0:35
Speaker 2: we're leaning into the global impact of trump Andomics by
0:39
Speaker 2: asking is India the winner in Trump's trade war with China.
0:44
Speaker 2: According to the White House, at least seventy countries are
0:47
Speaker 2: queuing up to do massive trade deals with the US,
0:50
Speaker 2: anything to avoid those reciprocal tariffs that President Trump has
0:54
Speaker 2: put on hold for a few months. Our reporting suggests
0:57
Speaker 2: that a much smaller number of actual negotiations are happening,
1:01
Speaker 2: and indeed, President Trump and China's President Shijingping can't even
1:05
Speaker 2: agree on whether they've talked to each other at all.
1:07
Speaker 2: But as Treasury Secretary Scott Besnant hinted in that interview
1:11
Speaker 2: earlier this week that you heard at the start of
1:13
Speaker 2: the show, India's government has been negotiating and may even
1:17
Speaker 2: be close to a deal. Even if that turns out
1:20
Speaker 2: to be optimistic, we can already say India has been
1:23
Speaker 2: one of the few countries seems to be benefiting from
1:27
Speaker 2: the global economic uncertainty unleashed by President Trump in the
1:30
Speaker 2: last few months. We reported last week that Apple is
1:34
Speaker 2: seeking to import most of the phones it sells in
1:36
Speaker 2: the US from India rather than China by the end
1:39
Speaker 2: of this year. That's double what it's currently producing in India.
1:43
Speaker 2: And the Indian stock market's one of the very few
1:45
Speaker 2: to be up since tariffs were announced on so called
1:48
Speaker 2: Liberation Day. So with markets ditterary everywhere, investors are even
1:53
Speaker 2: talking about India as a safe haven. So today we're
1:57
Speaker 2: going to get into how India's Prime Minister, India and
2:00
Speaker 2: Modi is himself learning the art of the deal, and
2:03
Speaker 2: also consider how India's long term ambition to replace China
2:08
Speaker 2: as the factory of the world might have got a
2:10
Speaker 2: massive leg up thanks to Donald Trump. Shrudi Shravastava is
2:16
Speaker 2: our reporter in New Delhi and she's been breaking all
2:18
Speaker 2: the news on that possible US India trade deal. We're
2:21
Speaker 2: going to talk to her in a minute. We also
2:23
Speaker 2: have Abhishek Gupta, senior India economists for Bloomberg Economics based
2:27
Speaker 2: in Mumbai. Previously worked as an economist at Merrill Lynch
2:31
Speaker 2: and a research analyst at the National Institute of Public
2:33
Speaker 2: Finance and Policy, India's premiere macro finance think tank. And
2:38
Speaker 2: Chris Anstey, Senior editor in Boston who writes our daily
2:41
Speaker 2: economics newsletter and is always across everything in my experience,
2:45
Speaker 2: Chris Abishek Shrudi, thanks very much for coming on Trumpnomics.
2:49
Speaker 3: It's a pleasure.
2:50
Speaker 1: Happy to be here. Stephanie Shrudy.
2:57
Speaker 2: I do want to start the conversation with you because
3:00
Speaker 2: you had a big scoop last week about what was
3:02
Speaker 2: potentially in this US India trade deal, and we should say,
3:06
Speaker 2: we're having this conversation on Tuesday afternoon or evening India time,
3:10
Speaker 2: so just get us up to speed. What do we
3:12
Speaker 2: think is going to be in it? And how surprising
3:14
Speaker 2: is it, you know, how far it's gone in just
3:16
Speaker 2: a few weeks.
3:17
Speaker 1: Things have indeed been moving very fast when it comes
3:20
Speaker 1: to negotiations which are happening on trade front, and it
3:23
Speaker 1: appears that India is in front of the line when
3:27
Speaker 1: it comes to securing a trade deal with the US.
3:30
Speaker 1: This has been said by several officials in Washington. Officials
3:34
Speaker 1: in New Darry are also optimistic of making use of
3:36
Speaker 1: this ninety day pause which Strup administration has given. And
3:40
Speaker 1: they have been moving fast to you know, they have
3:42
Speaker 1: been holding these virtual negotiations. There was a team last
3:46
Speaker 1: week of Indian trade officials in Washington to advance the
3:50
Speaker 1: negotiations which have been taking place. The Indian government issued
3:53
Speaker 1: a statement saying that they're looking to conclude a deal
3:55
Speaker 1: by fall of this year. Now the signals that there
3:58
Speaker 1: might be a possibility of six curing some sort of
4:02
Speaker 1: interim framework even before the fault deadline arrives. And I
4:05
Speaker 1: would say that India has played its cards really well
4:08
Speaker 1: so far. It has refrained from retaliation. Even before Trump
4:12
Speaker 1: came to the White House, the government made sure that
4:14
Speaker 1: it starts reducing duties on some of the key asks
4:18
Speaker 1: of Trump. In its federal budget, India overhauled its tariff policy.
4:22
Speaker 1: India has been labeled as a tariffs king by the US,
4:25
Speaker 1: but the US president several times, so India tried to
4:28
Speaker 1: ensure that it shakes off that label. It brought down
4:31
Speaker 1: tariffs on some eight thousand, five hundred items and that
4:34
Speaker 1: included some of the key ask of US president, like
4:37
Speaker 1: bourbon whiskey or tariffs on Harley Davidson bikes, and that
4:41
Speaker 1: I think has worked in India's favor. It has been appreciated,
4:45
Speaker 1: so to say in the Trump administration that India's working
4:48
Speaker 1: in good faith. And as you rightly said, this is
4:50
Speaker 1: movie's art of making reed. So the two sides have
4:54
Speaker 1: finalized what we call terms of reference, and this happened
4:57
Speaker 1: during US Vice President J. D. Vance's last week. He
5:00
Speaker 1: was an afford trip to India. He met Prime Minister Moody.
5:04
Speaker 1: He also showed a bit of softer diplomacy, which he's
5:08
Speaker 1: not very well known for.
5:09
Speaker 2: He had his photos with his family in front of
5:11
Speaker 2: Taj Mahal or the mandatory photose you have to have.
5:14
Speaker 1: Absolutely absolutely, so all those things basically they showcase that
5:19
Speaker 1: there is some sort of understanding between India and US
5:23
Speaker 1: and they expect to take forward this collaboration that they
5:26
Speaker 1: are trying to show. The two sides have agreed to
5:28
Speaker 1: discuss on nineteen chapters, nineteen categories what we have been
5:32
Speaker 1: tool and we reported it last week as well, that
5:34
Speaker 1: they are looking to discuss greater market access for Indian
5:37
Speaker 1: and American goods, and America has specifically asked for greater
5:41
Speaker 1: market access for agriculture goods. They will also be talks
5:44
Speaker 1: on e commerce. Some of these American companies like Amazon,
5:47
Speaker 1: they have been calling for level playing feet for a
5:50
Speaker 1: long time. Now they are going to discuss about a
5:53
Speaker 1: rule that India has that you have to store data
5:56
Speaker 1: on local servers.
5:57
Speaker 2: India is a country that's kind of been famous for
6:00
Speaker 2: having a lot of both visible and invisible trade barriers.
6:04
Speaker 2: Was there any signal before this that Prime Minister Moody
6:09
Speaker 2: was minded to make all of these changes and to
6:12
Speaker 2: open up or do we really think that he has
6:14
Speaker 2: been spurred by Donald Trump's tariff war? That's for you.
6:18
Speaker 1: Shruti, one of the trade experts we spoke to, said
6:21
Speaker 1: this was the first significant overhaul that happened in decades
6:25
Speaker 1: in India. So of course India has maintained high tariffs
6:28
Speaker 1: for a long time. It says that it has done
6:31
Speaker 1: so to protect its domestic industries. For instance, auto auto
6:35
Speaker 1: has had one fifty percent duty and now they have
6:37
Speaker 1: been slashed to seventy percent in the federal budget that
6:40
Speaker 1: happened in February. So clearly India preempted the tariff war,
6:44
Speaker 1: and it took measures to ensure that it has a
6:47
Speaker 1: first mover advantage, and I think that clearly worked.
6:50
Speaker 2: There's been discussion of, for example, the EU India Tariff
6:54
Speaker 2: trade Deal, the UK India Trade Deal for many years
6:58
Speaker 2: and they've never quite got off the ground. I mean,
7:01
Speaker 2: I remember from the sad days I've spent at wto
7:05
Speaker 2: ministerials and when it came to anything to do with agriculture,
7:08
Speaker 2: India was the absolute hold out in terms of wanting
7:11
Speaker 2: to get hold on to the barriers against competition in
7:14
Speaker 2: agriculture in that kind of global context. So do we
7:18
Speaker 2: think that there will be real progress, that India will
7:20
Speaker 2: do things that it has been unwilling to do with
7:22
Speaker 2: any in any other forum over the last few decades.
7:25
Speaker 1: Absolutely, Stephanie. That is what we are seeing is unfolding
7:28
Speaker 1: right now.
7:29
Speaker 2: But they're not just talking about it. People genuinely think
7:32
Speaker 2: it will happen. We won't find when we get the
7:34
Speaker 2: deal announced that actually it's all a bit less than advertised.
7:37
Speaker 1: So I've been talking to these exporters, and I have
7:39
Speaker 1: been talking to these export organizations and all the people
7:42
Speaker 1: who are involved in this. They have all been some
7:45
Speaker 1: have been happy, some have been sad because the high
7:48
Speaker 1: barriers which were there, they are sure to be taken off.
7:51
Speaker 1: That's what they have been told by the officials in
7:54
Speaker 1: you know, closed door meetings. So that is something which
7:57
Speaker 1: it seems it's going to happen now. And India has
8:00
Speaker 1: been negotiating with you for eighteen years eighteen.
8:03
Speaker 4: Eighteen eight years.
8:04
Speaker 1: Yes, they have been negotiating for eighteen years, but just
8:07
Speaker 1: to be sure, the talks were passed in twenty fifteen
8:10
Speaker 1: when the movie administration came for the first time, So
8:13
Speaker 1: the talks were paused then and resumed in twenty twenty one.
8:16
Speaker 1: So they have resumed negotiations now and this year we
8:19
Speaker 1: saw the sense of urgency which is there. They'd announced
8:22
Speaker 1: a deadline. They said by end of this year they
8:24
Speaker 1: want to conclude a deal. Maybe this will be an
8:27
Speaker 1: interim deal, but they will do a deal with you
8:29
Speaker 1: this year. UK also seems like a possibility now because
8:33
Speaker 1: given all the cures that has been created by Trump's tariff,
8:36
Speaker 1: it seems that India would be close to achieving at
8:39
Speaker 1: least three deals this year with U, US and UK.
8:42
Speaker 2: Thank you very much, Shusy. That's fantastic. If I was
8:45
Speaker 2: sitting in the Trump White House listening to this, I
8:47
Speaker 2: would say this is an absolute example of what Donald
8:50
Speaker 2: Trump's trying to do. This will be a real win
8:53
Speaker 2: for the US and for the world that after decades
8:55
Speaker 2: of India being dedicated to keeping a sort of high
8:59
Speaker 2: tariff pawers and protecting its domestic market, Donald Trump has
9:04
Speaker 2: done something that other countries and multilateral efforts have not
9:07
Speaker 2: been able to do. I mean, abashek, how do you
9:10
Speaker 2: think India is viewing this? Is it If it's a
9:12
Speaker 2: win for America. It seems like Prime Minister Modi is
9:15
Speaker 2: also considering this a win for India absolutely.
9:20
Speaker 3: I think it's a win win situation for both countries.
9:23
Speaker 3: If you look at the US position against China, it's
9:25
Speaker 3: a game of chickens. I mean, time is of the
9:28
Speaker 3: essens which country falls first, and in that regard, big
9:34
Speaker 3: great deal with India, which is the most populous country
9:37
Speaker 3: in the world and the fifth largest economy in the world,
9:40
Speaker 3: has a big domestic market, would give Trump something to
9:45
Speaker 3: boast about domestically and from India's perspective. Moody about a
9:50
Speaker 3: decade back, he said that he would like to increase
9:52
Speaker 3: India's manufacturing share to twenty five percent of the GDP.
9:54
Speaker 3: While we know and understand as economists that's absolutely sort
9:58
Speaker 3: of out of the question, but it would certainly give
10:01
Speaker 3: India's industrial sector a big leg up in terms of
10:05
Speaker 3: if it ends up being the first country to seal
10:07
Speaker 3: this deal with the US.
10:08
Speaker 2: And just remind us, even before the deal, when those
10:11
Speaker 2: famous sort of list of reciprocal tariff rates, India was
10:15
Speaker 2: going to do relatively better than some other countries, and
10:18
Speaker 2: you pointed out Abishek, I think that the Indian exports
10:21
Speaker 2: might benefit just from the fact that there was a
10:24
Speaker 2: lower tariff rate. Indian exporters are potentially looking at gains
10:28
Speaker 2: even before this kind of deal comes in.
10:30
Speaker 3: So yes, the initial tartifs which were imposed, India got
10:33
Speaker 3: a twenty six percent reciprocal tariff and when you compare
10:37
Speaker 3: it within the region, within the Asian region.
10:39
Speaker 2: As opposed to the mere one hundred and forty percent
10:41
Speaker 2: facing Chinese could.
10:42
Speaker 3: But even countries a Vietnam which was forty percent plus
10:46
Speaker 3: and even the lesser developed countries are just as Bangladesh
10:49
Speaker 3: and Pakistan, Indonesia, South Korea. I mean, all of these
10:53
Speaker 3: countries were sort of flabbed with much higher tariffs than India,
10:56
Speaker 3: which certainly increases India's competitiveness with other countries, and it
11:01
Speaker 3: also helps India make up for its less competitiveness when
11:06
Speaker 3: it comes to some of the other areas such as
11:08
Speaker 3: logistic costs, bureaucracy, and the red tape which kind of
11:12
Speaker 3: slows things down in India.
11:14
Speaker 2: Chris, you wrote about some of this and particularly companies
11:18
Speaker 2: potentially seeing advantages in shifting production or increasing production in
11:22
Speaker 2: India in one of your newsletters this week. Then that
11:26
Speaker 2: Apple move, for example, is pretty significant.
11:29
Speaker 4: Yes, it's clear that from an American corporate standpoint, if
11:34
Speaker 4: you're going to conclude that whether it's Trump or whether
11:39
Speaker 4: it's a Democratic Party president, strains with China are not
11:44
Speaker 4: going to go away. Tariff rates with China may not
11:48
Speaker 4: stick at one hundred and forty five percent, but they're
11:51
Speaker 4: going to be significant going forward for years to come.
11:55
Speaker 4: There are major geostrategic issues with China. India doesn't appear
12:00
Speaker 4: to have any of that. India doesn't have any sort
12:04
Speaker 4: of threatening posture towards US allies in the way that
12:09
Speaker 4: China does. Visa of v Japan, South Korea, Taiwan, not
12:13
Speaker 4: an ally, but certainly a partner for the US. India
12:17
Speaker 4: is a much friendlier option, and for decades we've seen
12:22
Speaker 4: administration after administration in Washington actively seek out stronger ties
12:27
Speaker 4: with New Delhi. So it would be logical to conclude
12:31
Speaker 4: that ARC will continue. India, as Abishek pointed out, has
12:36
Speaker 4: huge natural resources in terms of labor, in terms of
12:40
Speaker 4: the ability to if you do solve the red tape,
12:45
Speaker 4: the logistics issues, the infrastructure issues, you've got a major
12:49
Speaker 4: labor force that could, in theory replace some of the
12:54
Speaker 4: production that China now holds in the global supply chain.
12:58
Speaker 4: And what we've seen from Apple is that they're moving
13:01
Speaker 4: much more quickly than people had anticipated even just a
13:04
Speaker 4: few years ago, with Apple in the past week or
13:07
Speaker 4: so saying that they aim to assemble most of the
13:11
Speaker 4: iPhones sold in the United States in India. So it
13:14
Speaker 4: really is quite a dramatic change.
13:16
Speaker 2: And we've tended to say, oh, it's very hard to
13:18
Speaker 2: unpack these global supply chains. But as you point out
13:21
Speaker 2: in your piece, there was a study only a couple
13:22
Speaker 2: of years ago on Apple's reliance on China for its
13:26
Speaker 2: global supply chain that said even just shifting ten percent
13:29
Speaker 2: of the production capacity out of China, where it now
13:33
Speaker 2: makes nearly was making nearly all its iPhones would take
13:36
Speaker 2: eight years. And yet, as you pointed out, there's going
13:39
Speaker 2: to be a significant ramp and there will be potentially
13:41
Speaker 2: in the next few months.
13:43
Speaker 4: I think one of the Bloomberg conferences a few years ago,
13:46
Speaker 4: the tagline was sooner than you think. I think that
13:49
Speaker 4: applies here. When you change incentive structures massively, it just
13:56
Speaker 4: gives a big push. And it's not only Apple but
14:01
Speaker 4: its suppliers like Fox, KHN and others that are also moving.
14:05
Speaker 4: You know, my impression is that as time goes on,
14:08
Speaker 4: we will see proper ecosystem, not just assembling the iPhone,
14:13
Speaker 4: but manufacture of the inputs shifting to India as well.
14:18
Speaker 2: Abishek I've seen to remember, in the sort of previous
14:21
Speaker 2: incarnations of this podcast, we had conversations around the bouts
14:24
Speaker 2: of optimism around India, and you were sort of cautiously optimistic.
14:30
Speaker 2: But we're also making the point that there were structural,
14:32
Speaker 2: long term challenges that India faced in truly becoming a
14:37
Speaker 2: sort of replacement for India as the factory of the world.
14:40
Speaker 2: I mean, yes, we've seen a big shift in the
14:42
Speaker 2: playing field in India's direction, But does Prime Minister Modi's
14:47
Speaker 2: government have the strategy to overcome some of those issues
14:52
Speaker 2: even as it seizes this opportunity.
14:55
Speaker 3: The way I look at it, I think india policymaker
14:58
Speaker 3: and in the government recognize that the US trying to
15:01
Speaker 3: trade war much earlier on in Trump's first presidency, and
15:06
Speaker 3: if we look at the steps taken by the government
15:08
Speaker 3: can at least trace it back to starting with reducing
15:12
Speaker 3: corporate taxes in twenty nineteen towards the end of the
15:14
Speaker 3: first Trump's first presidency, and then right after the pandemic,
15:18
Speaker 3: unveeling manufacturing subsidies for domestic production, spending massive amounts of
15:23
Speaker 3: money in upgrading India's creaking infrastructure or not creaking. Mean,
15:26
Speaker 3: they've never really had any infrastructure in the first place,
15:29
Speaker 3: but they've started really investing massive amounts of money in
15:32
Speaker 3: laying new roads, new ports, new airports, and a lot
15:36
Speaker 3: of this infrastructure is now starting to come up online,
15:40
Speaker 3: and I think all of this would boost India's logistical efficiencies.
15:45
Speaker 3: On top of all of this, when you add this
15:47
Speaker 3: direct competitiveness, it really makes foreign investors look at India
15:51
Speaker 3: and foreign manufacturing firms look at India in a different way.
15:55
Speaker 3: So we did a short sort of research on this,
15:57
Speaker 3: and just in terms of numbers, we identified some nine
16:01
Speaker 3: to ten different sectors where India already has existing supply chains.
16:05
Speaker 3: So these are sectors such as carpets or leather articles
16:08
Speaker 3: or precious stones, furniture and textiles, and also chemicals, plastics,
16:13
Speaker 3: and electronics where iphoned has been a key success for India,
16:16
Speaker 3: and engineering goods. So in all of these nine to
16:20
Speaker 3: ten different sectors, India's exports to the US in twenty
16:23
Speaker 3: twenty three total about forty billion dollars. Now, when you
16:27
Speaker 3: look at some of the other Asian countries over which
16:30
Speaker 3: India got a tax advantage, Let's say, if you only
16:33
Speaker 3: just look at China and Vietnam, they are exporting what
16:36
Speaker 3: four hundred billion dollars of these goods to the US.
16:38
Speaker 2: So it's a lot of opportunity here.
16:40
Speaker 3: Yeah, So there's a massive opportunity to scale up in
16:43
Speaker 3: these sectors. And it's not that difficult. It's not that
16:45
Speaker 3: India does not have the technical Now, I think if
16:48
Speaker 3: the incentive structures are aligned in the right direction, they
16:51
Speaker 3: will find a way money will flow into these areas
16:54
Speaker 3: to skill the people.
16:56
Speaker 2: It's interesting, of course, because we're talking about this as
16:58
Speaker 2: a big opportunity. But I suspect if you put to
17:00
Speaker 2: President Trump that he was going to enable India to
17:03
Speaker 2: fill the gap left by Vietnam and China, when the
17:05
Speaker 2: whole point of this whole exercise is supposed to be
17:07
Speaker 2: about bringing production back to the US. We shall see. Chris,
17:11
Speaker 2: you did point out a sort of irony in all
17:13
Speaker 2: this in your newsletter, which is that for decades that
17:16
Speaker 2: India's sort of been the on the naughty step in
17:19
Speaker 2: the international financial system for not following the advice of
17:22
Speaker 2: the IMF and others when it comes to liberalizing your
17:25
Speaker 2: economy and certainly having an open economy. I mean, although
17:28
Speaker 2: there has been some deregulation and liberalization, we used to
17:32
Speaker 2: be called the permit ras. You know, you needed to
17:34
Speaker 2: have a permit for everything, and intervention was subsidies and
17:39
Speaker 2: intervention were right. I guess these days it's now so fashionable,
17:42
Speaker 2: and that's kind of the direction that America's moving in.
17:45
Speaker 2: That's less of an obstacle in these kind of negotiations.
17:49
Speaker 4: That's right. New Delhi is kind of in pole position
17:52
Speaker 4: here in part because teach.
17:55
Speaker 2: Donald Trump a few things about imposing lots of subsidies
17:58
Speaker 2: and regulations.
17:59
Speaker 4: Yeah, think about it. The autarcic economic model is something
18:03
Speaker 4: that India specialized in building a wool right on exactly.
18:08
Speaker 4: And it's because it did that and did not adopt
18:12
Speaker 4: the sort of East Asian export lead industrial policy model
18:17
Speaker 4: that India does not have the kind of massive trade
18:21
Speaker 4: surplus that many of the East Asian economies do, and
18:25
Speaker 4: therefore doesn't spur the kind of rass from Trump that
18:29
Speaker 4: he reserves for China, Japan, the European Union and so on.
18:34
Speaker 2: Not yet.
18:35
Speaker 4: No, India has only been ripping off the US a
18:37
Speaker 4: little bit. They're minor. It will be interesting to see,
18:40
Speaker 4: as you say, the extent to which the Trump administration
18:44
Speaker 4: wants to keep up the friend shoring model. The Biden
18:48
Speaker 4: administration and Janet Yellen certainly really liked the idea of
18:53
Speaker 4: friend shoring, of basing production in US partners and allies.
19:00
Speaker 4: Yellen actually went to India four times as Treasury Secretary,
19:04
Speaker 4: really dedicated a lot of time to actively encouraging supply
19:09
Speaker 4: chains to shift to India. But, as you say, Trump,
19:13
Speaker 4: and certainly.
19:13
Speaker 2: He is not sounded very keen on friends shuring.
19:15
Speaker 4: Now and you hear Howard Lutnik, it's all about reshing about,
19:20
Speaker 4: you know, getting manufacturing back to Dayton and Toledo and
19:25
Speaker 4: all of these rustbelt places in Ohio and the Great
19:28
Speaker 4: Lake States that obviously carried Trump to victory. So it
19:32
Speaker 4: will be something to watch.
19:34
Speaker 2: Abishik, I know that you have also thought a little
19:36
Speaker 2: bit about how investors are viewing India, and of course
19:40
Speaker 2: you talk to Bloomberg clients a lot there. Certainly there's
19:43
Speaker 2: been a lot of optimism in the Indian markets for
19:45
Speaker 2: several years, and now there is this discussion around it
19:49
Speaker 2: being a safe haven, a safe place to park your
19:51
Speaker 2: money in this very choppy global waters. We do not
19:56
Speaker 2: give investment advice on this show, and I'm not going
19:58
Speaker 2: to start now, but do you think in this w
20:00
Speaker 2: broad sense, investors a right to see India as a
20:02
Speaker 2: relative safe haven in this topsy turvy world.
20:05
Speaker 3: I think you already know I'm a very big optimist
20:08
Speaker 3: on India.
20:10
Speaker 2: Just kids, since you live so.
20:12
Speaker 3: The way I'm tracking the economy, I've lowered my GDB
20:16
Speaker 3: forecast for the current financial year about forty basis points.
20:19
Speaker 2: Zero point four of a percentage point.
20:21
Speaker 3: Yeah, so at six point eight percent. Even now, I
20:24
Speaker 3: am an outlier and probably one of the most optimistic
20:27
Speaker 3: forecasts on the street. Inflation is very low in India,
20:30
Speaker 3: It's below the target level. The rupee a very sort
20:34
Speaker 3: of stable currency at the moment. On top of that,
20:36
Speaker 3: if you add India's high debt shields makes India's debt
20:41
Speaker 3: also very attractive.
20:42
Speaker 2: So yeah, you can earn a high interest.
20:44
Speaker 3: High interest at the top of that a stable currency
20:47
Speaker 3: which typically doesn't happen in ems. So it does give
20:50
Speaker 3: India that advantage and attractive option for foreign investors. And
20:54
Speaker 3: on top of that you add this trade advantage and
20:57
Speaker 3: India being talked about as one of the four countries
21:00
Speaker 3: to sign, if not the first country to sign the
21:02
Speaker 3: trade deal with the US, so that really boosts its
21:05
Speaker 3: equity markets as well.
21:06
Speaker 2: My team covers economics and politics. I can't help noticing
21:09
Speaker 2: that even as we are so optimistic on the economic front,
21:12
Speaker 2: there is an awful lot of war of words at
21:15
Speaker 2: the very least between India and Pakistan at the moment,
21:17
Speaker 2: following the militants attack a very violent attack in Kashmir
21:22
Speaker 2: a few days ago. Is the world crazy to be
21:25
Speaker 2: talking about India as a safe haven when there's this
21:27
Speaker 2: kind of ratcheting up of rhetoric between these two very
21:30
Speaker 2: long standing regional rivals who have at times gone to
21:35
Speaker 2: war with each other other.
21:37
Speaker 3: Now I see this more of a geopolitical security perspective
21:41
Speaker 3: from India perspective and not have an economic story. Having
21:45
Speaker 3: said that, I think it does slow down the focus
21:49
Speaker 3: on the economy by the government and then the policymakers.
21:52
Speaker 3: And what that means is that if let's say the
21:56
Speaker 3: Indian US were able to move at a very rapid
21:59
Speaker 3: base on negotiating the trade deal, this kind of a
22:03
Speaker 3: shift in policy focus or trying to focus energies on
22:07
Speaker 3: the security front is going to delay things down. And
22:10
Speaker 3: a big risk is that if things get out of hands,
22:13
Speaker 3: then India being a safe haven, as you said, might
22:16
Speaker 3: be questioned and we will see in days and months
22:19
Speaker 3: to come that would get reflected in the stock market
22:21
Speaker 3: if there's a major confrontation on the line of control.
22:23
Speaker 3: But my sense is that the policy makers do understand
22:26
Speaker 3: this that there's not much to gain. India is not
22:28
Speaker 3: seeing a heavy political cycle this year. There's only one
22:31
Speaker 3: state elections. Over the course of the next twelve months.
22:34
Speaker 3: So I think from that perspective, the wise thing to
22:37
Speaker 3: do would be to focus on the economy and gain
22:40
Speaker 3: an upper hand over there, rather than get embroiled in
22:43
Speaker 3: an unending sort of across the border confrontation.
22:48
Speaker 4: So perhaps Abishek India could be considered from an international
22:52
Speaker 4: investor standpoint as a diversification play rather than a safe haven.
22:57
Speaker 4: You put your safe haven part of your portfolio in
23:01
Speaker 4: Switzerland and you put a little bit of extra risk
23:04
Speaker 4: capital into India. If we were.
23:06
Speaker 2: Giving advice, which we obviously not, should she, as we heard, Abushek,
23:10
Speaker 2: is a longstanding optimist about India. I can see you
23:14
Speaker 2: looking a little bit more skeptical, and I certainly have
23:16
Speaker 2: seen a lot of these discussions come and go over
23:19
Speaker 2: the years. So do you think maybe we should be
23:21
Speaker 2: a bit more cautious.
23:22
Speaker 1: I think cautious is the word for now, because the
23:25
Speaker 1: people have been speaking with the companies that have been
23:27
Speaker 1: talking with they're all very excited and then go about
23:29
Speaker 1: the opportunity which has opened up, and they're certainly looking
23:32
Speaker 1: forward to it, but they're on a wait and watch mode.
23:36
Speaker 1: No one is willing to put their money online right
23:38
Speaker 1: now because there is a fair bit of awareness that
23:41
Speaker 1: what if tomorrow Trump and She strike a deal, so
23:45
Speaker 1: all that money they put an expansion, it will all
23:47
Speaker 1: be a waste for them. On the investors coming to India,
23:51
Speaker 1: on the money being diverted to India. We have still
23:55
Speaker 1: not been able to manage, you know, factor market, market reforms,
23:57
Speaker 1: on lund site, on labor side, and these are big
24:00
Speaker 1: grouses of these companies. It's still very difficult to acquire
24:03
Speaker 1: land in India. The labor laws are not very friendly
24:06
Speaker 1: with the companies which operate here. So these are some
24:09
Speaker 1: of the things which the Moodi government is yet to do.
24:12
Speaker 1: So I think there is excitement about the opportunity that
24:15
Speaker 1: India opens up, but there is also a fair bit
24:18
Speaker 1: of skepticism when it comes to actually investing in India.
24:21
Speaker 1: So I think the people investors want to wait and
24:25
Speaker 1: watch and see how things play out before they come
24:27
Speaker 1: at their money.
24:32
Speaker 2: That is a very useful note of caution, Shreuty. It
24:35
Speaker 2: is true that amid all this talk of you know,
24:38
Speaker 2: there's no winners from trade wars, if you listen to
24:40
Speaker 2: this conversation, you might think there were some gains to
24:44
Speaker 2: be had for India and the US in the deal
24:47
Speaker 2: that seems to be in the offering. But what's true
24:51
Speaker 2: for Indian companies is also true for businesses around the world.
24:54
Speaker 2: No one quite knows what they can count on. Shruty,
24:58
Speaker 2: Abishek and Chris, thank you so mu.
25:00
Speaker 4: Much, Thank you, good pleasure, Thank you.
25:09
Speaker 2: Thanks for listening to Trumpnomics from Bloomberg. It was hosted
25:12
Speaker 2: by Me, Stephanie Flanders and I was joined by Shuji Shravastava,
25:15
Speaker 2: Abershet Gupta and Chris Anstey. Trumponomics is produced by Samasadi
25:20
Speaker 2: and Moses and Dam with help from Chris Martlu, tala
25:23
Speaker 2: Ahmadi and Amy Keen. Sound design is by Blake Maples
25:27
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