India is growing strong, but slowing down sequentially: Gustavo Medeiros

Economic Times

11-08-2025

Ashmore Group, a UK-based investment manager, is allocating lesser capital to India in the short term citing rich valuations and uncertainty around Donald Trump's tariffs on Indian imports into the US. In an interview with Himadri Buch, the firm's head of research, Gustavo Medeiros spoke about what's in store for investors among other issues:
ADVERTISEMENT What's your assessment of Donald Trump's 50% tariffs on India?That's Trump. He's trying to drive a hard bargain. He sees the world as a zero-sum game. So, I wouldn't be surprised. But again, anything about 50% doesn't make a big difference, because you already kind of killed most of the trade that is actually sensible.
So, if it's 75 instead of 50, it will not make a significant difference, honestly. There are some sectors, such as generics, where neighbouring countries will never be competitive enough. Whether tariffs are set at 30, 50, or 70, the impact will not change significantly, as the situation is relatively complicated.
How are foreign investors currently viewing India vis-a-vis other markets currently?Foreign investors have been much less aggressive on India for the last six to nine months. There are a number of factors behind that, most of which are related to valuations and relative value between relative performance and relative value between India and other emerging market countries, both in Asia and elsewhere. We were a bit more cautious on the small- and mid-cap space, where there is a huge amount of activity from locals. Foreign investors haven't been getting out en masse, but they also haven't been investing significantly. What you do have is better flows to EM overall, and quite a lot of that has been in the passive space. India benefits from that, getting around 20% these days, even in its share on the MSCI EM. But dedicated global emerging market active flows to India have been, at best, lukewarm.
Do you see India getting derated?
ADVERTISEMENT In relative terms, it's already happening. I would say it's been the case for the last nine months. I don't think this is very much related to the fundamentals of the Indian economy or to the fundamentals of the potential forward-looking earnings per share of Indian companies.
(You can now subscribe to our ETMarkets WhatsApp channel)