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Economic Times
7 days ago
- Business
- Economic Times
India needs fiscal push to revive domestic growth: Arvind Sanger
But for now, growth doesn't look terrible, it just doesn't look very robust either. Synopsis Arvind Sanger of Geosphere Capital Management discusses Trump's tariff plans. These plans include potential hikes on pharmaceutical imports and Indian goods. China may have leverage due to rare earth elements and Trump's desire for a meeting with Xi Jinping. India lacks a similar advantage. Sanger also addresses concerns about consistent FII selling and the need for domestic growth initiatives. "China imports as much oil from Russia as India does, but India doesn't have a similar trump card—no pun intended—that it can use against Trump. Right now, it's about Witkoff heading to Moscow tomorrow, and Putin offering some kind of olive branch by saying he won't launch air attacks in exchange for avoiding tariffs. How all of this plays out remains to be seen," says Arvind Sanger, Geosphere Capital Management. ADVERTISEMENT Like I mentioned, there's a lot to talk about when it comes to Trump—his commentary on the EU, China, India, and pharma. Let's begin with what he said about the pharmaceutical sector. He's announced a sharp hike in tariffs—eventually going up to 250% over the next 12 months. How do you see this playing out for pharma exporters to the US, especially companies operating within the US? Arvind Sanger: Well, remember, he had already mentioned a 200% tariff a couple of weeks ago. Now he's saying 150%, eventually going to 250%. So, to be honest, 200 or 250—who cares? The bottom line is, he's trying to phase this in over time to encourage more pharmaceutical manufacturing within the US. Clearly, that's a disadvantage for Indian pharmaceutical companies that rely heavily on exports to the US. It's a headwind, and the market has been aware of it for a few weeks now. So, I don't think it's significantly new information. That headwind is already factored in and is likely to have an impact. Whether it starts at 150% or eventually reaches 250%, it will negatively affect the pharmaceutical industry. Trump's tone has also been quite harsh on the Indian market. He's said he's planning a substantial tariff hike in the next 24 hours. Meanwhile, his commentary on China seems more conciliatory—he's even planning a meeting with Xi Jinping. On the flip side, he's again threatening the EU with a possible 35% tariff if certain conditions aren't met. How do you see Trump's tariff strategy playing out, especially for India and China? And how do you think the markets will react? Arvind Sanger: It sounds like China has something Trump wants. Two key things, in fact—first, the US needs rare earths in the short term, and second, Trump seems quite eager to visit China, meet Xi Jinping, and get a big photo op. Those are the cards China is playing to its advantage. China imports as much oil from Russia as India does, but India doesn't have a similar trump card—no pun intended—that it can use against Trump. Right now, it's about Witkoff heading to Moscow tomorrow, and Putin offering some kind of olive branch by saying he won't launch air attacks in exchange for avoiding tariffs. How all of this plays out remains to be sense is that Trump is unlikely to take any dramatically escalatory steps against India—especially on the Russian oil front. If India were to stop buying Russian oil altogether, Russia would struggle to find replacement buyers, meaning some of that oil would be off the global market. That would definitely spike oil prices. ADVERTISEMENT We must keep in mind that when it comes to Iran, Venezuela, or even Russia, Trump's bark has so far been worse than his bite. In the case of Iran, for instance, he made strong statements, but Iranian oil flows remained largely unaffected. So personally, I'm not overly worried about Trump being truly serious about halting Russian oil flows. He's been a toothless tiger so far when it comes to stopping oil from major producers. Domestically, what's the bigger concern for India? Forget tariffs for a moment—why is there consistent FII selling? What should domestic investors be doing right now? Arvind Sanger: If you look at the earnings numbers, auto sales, two-wheeler sales—basically any India-specific economic statistic—it doesn't quite support the kind of multiples that the Indian market is currently trading at. So, while India has been positioned as a growth story, that growth isn't showing up in earnings in a big enough way to get people like me excited. ADVERTISEMENT Yes, India might still be the fastest-growing major economy, but it's not translating meaningfully into numbers that make it a 'must buy.' The weakening rupee is also reducing India's attractiveness for dollar-based investors. And if exports take a hit, we'll need to find domestic opportunities where growth is Indian government may need to step up—not just the RBI, but also on the fiscal front. They may need to be more aggressive, even run a slightly higher deficit, to kickstart growth. If that happens, then domestic themes like consumption, infrastructure, leisure, and travel could benefit. But for now, growth doesn't look terrible, it just doesn't look very robust either. 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Time of India
7 days ago
- Business
- Time of India
India needs fiscal push to revive domestic growth: Arvind Sanger
"China imports as much oil from Russia as India does, but India doesn't have a similar trump card—no pun intended—that it can use against Trump. Right now, it's about Witkoff heading to Moscow tomorrow, and Putin offering some kind of olive branch by saying he won't launch air attacks in exchange for avoiding tariffs. How all of this plays out remains to be seen," says Arvind Sanger , Geosphere Capital Management. Like I mentioned, there's a lot to talk about when it comes to Trump—his commentary on the EU, China, India, and pharma. Let's begin with what he said about the pharmaceutical sector. He's announced a sharp hike in tariffs—eventually going up to 250% over the next 12 months. How do you see this playing out for pharma exporters to the US, especially companies operating within the US? Arvind Sanger: Well, remember, he had already mentioned a 200% tariff a couple of weeks ago. Now he's saying 150%, eventually going to 250%. So, to be honest, 200 or 250—who cares? The bottom line is, he's trying to phase this in over time to encourage more pharmaceutical manufacturing within the US. Clearly, that's a disadvantage for Indian pharmaceutical companies that rely heavily on exports to the US. It's a headwind, and the market has been aware of it for a few weeks now. So, I don't think it's significantly new information. That headwind is already factored in and is likely to have an impact. Whether it starts at 150% or eventually reaches 250%, it will negatively affect the pharmaceutical industry. 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Meanwhile, his commentary on China seems more conciliatory—he's even planning a meeting with Xi Jinping. On the flip side, he's again threatening the EU with a possible 35% tariff if certain conditions aren't met. How do you see Trump's tariff strategy playing out, especially for India and China? And how do you think the markets will react? Arvind Sanger: It sounds like China has something Trump wants. Two key things, in fact—first, the US needs rare earths in the short term, and second, Trump seems quite eager to visit China, meet Xi Jinping, and get a big photo op. Those are the cards China is playing to its advantage. China imports as much oil from Russia as India does, but India doesn't have a similar trump card—no pun intended—that it can use against Trump. Right now, it's about Witkoff heading to Moscow tomorrow, and Putin offering some kind of olive branch by saying he won't launch air attacks in exchange for avoiding tariffs. How all of this plays out remains to be seen. Live Events My sense is that Trump is unlikely to take any dramatically escalatory steps against India—especially on the Russian oil front. If India were to stop buying Russian oil altogether, Russia would struggle to find replacement buyers, meaning some of that oil would be off the global market. That would definitely spike oil prices. We must keep in mind that when it comes to Iran, Venezuela, or even Russia, Trump's bark has so far been worse than his bite. In the case of Iran, for instance, he made strong statements, but Iranian oil flows remained largely unaffected. So personally, I'm not overly worried about Trump being truly serious about halting Russian oil flows. He's been a toothless tiger so far when it comes to stopping oil from major producers. Domestically, what's the bigger concern for India? Forget tariffs for a moment—why is there consistent FII selling? What should domestic investors be doing right now? Arvind Sanger: If you look at the earnings numbers, auto sales, two-wheeler sales—basically any India-specific economic statistic—it doesn't quite support the kind of multiples that the Indian market is currently trading at. So, while India has been positioned as a growth story, that growth isn't showing up in earnings in a big enough way to get people like me excited. Yes, India might still be the fastest-growing major economy, but it's not translating meaningfully into numbers that make it a 'must buy.' The weakening rupee is also reducing India's attractiveness for dollar-based investors. And if exports take a hit, we'll need to find domestic opportunities where growth is visible. The Indian government may need to step up—not just the RBI, but also on the fiscal front. They may need to be more aggressive, even run a slightly higher deficit, to kickstart growth. If that happens, then domestic themes like consumption, infrastructure, leisure, and travel could benefit. But for now, growth doesn't look terrible, it just doesn't look very robust either.
Time of India
30-07-2025
- Business
- Time of India
Arvind Sanger warns US tariffs on India could exceed 20% without a strong deal
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads "There's a lot of negotiating through the press going on, and there's a clear recognition within the Trump administration that implementing tariffs like the 100%+ ones announced back in April only result in U.S. retailers running out of inventory and store shelves going empty," says Arvind Sanger Well, so far it seems like 15% is where the EU and Japan have landed. But they've agreed to cough up—or at least President Trump claims they've agreed to cough up—a fairly significant amount of investment into the U.S. I'm not sure what kind of deal India is aiming for. A month or month-and-a-half ago, I thought India would be at the front of the line. Now, unfortunately, it seems like India is at the back of the line. And frankly, the deals are going Trump's way. He didn't have to give anything to the EU in exchange for what he got. I don't think he gave up much to Japan either. So, the problem is that the later you come to the table, the less leverage you that sense, I'm not sure how it will pan out. But it's certainly going to be north of 15%, and whether it's 20% or higher will depend on how good a deal India can negotiate. Clearly, President Trump is negotiating with these public claims. They're not likely to reflect the final settlement, but we also don't know where it will ultimately land. What does seem clear is that it's unlikely to settle at the low levels we were hoping for just a few weeks a lot of negotiating through the press going on, and there's a clear recognition within the Trump administration that implementing tariffs like the 100%+ ones announced back in April only result in U.S. retailers running out of inventory and store shelves going empty. That's not something the U.S. government wants. China recognizes that some of these threats are hollow because both countries are heavily reliant on each my assumption is that there will be a lot of brinkmanship, but negotiations will continue. Tariffs are already at, I believe, 60%, which is not low. I'm not sure where things will eventually land, but my concern is that none of these outcomes are guaranteed. There's a lot of uncertainty, and yet the market is priced for perfection. That's the problem—global markets, especially the U.S. market, are assuming that everything will resolve perfectly. Yes, there have been a few good deals, but a lot still needs to remember, the sanctions are not directly on Russia. They're secondary sanctions on those buying Russian oil—primarily aimed at China and India, two of the largest buyers. Congress had proposed a bill imposing 500% secondary sanctions on Russian oil buyers, while President Trump has mentioned 100% sanctions. So that's the one hand, they're trying to negotiate deals with China and India; on the other, they're threatening them over Russian oil purchases. I remain skeptical. President Trump has talked tough on Iran and Venezuela in the past, but his actions have ultimately been restrained—to avoid oil price spikes—because he wants the Fed to cut rates. So I don't believe these threats will be acted upon, but over the past couple of days, he has been speaking quite seriously about them. We're keeping a close watch, though we remain skeptical. Still, the market is clearly pricing in the risk. If Trump follows through on his threats, it could cause major disruption in oil markets—Russia is, after all, the second-largest exporter after Saudi an interesting one. The employment data might surprise on the downside. As for inflation, I'm not expecting any big shocks, but the worst-case scenario would be high inflation coupled with weak jobs data. That would trap the Fed—what do they prioritize then? Especially as these tariffs begin to bite. Remember, we're in a 10% tariff regime until August 1st, after which new tariffs kick in. So, in terms of inflation and growth slowdown, the Fed can't declare victory too early. They'll need to watch the data from August and September to assess the full impact of the tariffs before making Chairman Powell says it's still too early to make a call—even with some encouraging signs—he'll likely avoid taking a strong stance in either direction. But the market, which is increasingly counting on a September rate cut, might get nervous. There's a lot of good news already priced in, but plenty of uncertainty lies ahead.
Economic Times
21-07-2025
- Business
- Economic Times
Tariff Turmoil Ahead? Arvind Sanger flags growing risk for global economies
"So, the markets have so far largely ignored Liberation Day and everything that happened then and now maybe we are coming to at least start to worry about the reality that tariffs may be higher than we expected and in the background you have all this talk about him maybe will he fire Powell and on the interest rate policy," says Arvind Sanger, Geosphere Capital Management. ADVERTISEMENT I want to get your sense on this reiteration of the trade tariff deadline of 1st August that the US has imposed once again. What is your take on that because countries can continue to negotiate after that, but this is when they will have to start paying the tariffs. We still have a lot of uncertainty in terms of major economies and where they stand with the US. So, how do you think the markets could react in the near to medium term? Arvind Sanger: The market is starting to realise that maybe the tariffs are going to sustain at a level higher than what the market was comfortable with. 10% tariffs was fine, but if you are talking about 15%, 20% 25%, 30% and the interesting thing is that none of the major trading partners neither Japan nor the EU nor India all of or Korea every time there is a talk, oh, now we are about to sign a deal with India, today it is oh, we are about to sign a deal with Japan, a few weeks ago it was oh, we are about to sign a deal with EU. I think nobody wants to be first because nobody is confident about whether any deal done with the US under this president is ever final or will he find some reason to recut the deal sometime in the near future. So, this tariff uncertainty has been receded by this acronym taco of Trump always chickening out, but the concern the market is now starting to face is that maybe Trump is trying to prove he is not taco and there could be some tariff related turmoil. So, the markets have so far largely ignored Liberation Day and everything that happened then and now maybe we are coming to at least start to worry about the reality that tariffs may be higher than we expected and in the background you have all this talk about him maybe will he fire Powell and on the interest rate policy. So, there is enough uncertainty out there that I do not think the markets can keep rallying like they have for the last couple of months. Well, indeed that is what the question is about because for major economies the trade deal is not yet through and specifically with respect to India, what we are getting to understand is that the trade deal is on its way back to India from the US for now, it is the fifth round of talks between India and US that have already concluded but no major announcement or result from that is what we are getting to understand. How do you think markets are going to react to this particular news flow because we have already passed that deadline of 9th of July and even 1st of August is approaching now. But if till 1st of August as well, if no trade deal is being announced, what could be the market reaction? Arvind Sanger: It is bad for all global economies. Let us be clear, this is not US wins or US loses, and the rest of the world is not affected. It is US loses and it is all the major economies that are beneficiaries of global trade and all major economies are, India is maybe less affected because India's merchandise trade is not as big a percentage of GDP than other countries but nobody is going to be unimpacted by that. So, I think that it is it is a negative for India along with everybody else. So, it is something we have to start worrying about. We have so far put that on the back burner assuming something favourable would come around, but it is looking things are looking uncertain and that is never good for global economies and certainly not good for India although, again as I said, India is probably one of the less impacted but again it will have an impact. ADVERTISEMENT (You can now subscribe to our ETMarkets WhatsApp channel)
Economic Times
08-07-2025
- Business
- Economic Times
Tariffs a temporary storm, structural reforms key for India: Arvind Sanger
So, I think that the earnings will and the commentary from the corporates will be determining more importantly in my opinion as to what Indian markets do in the coming weeks rather than the tariff news. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads "But getting some reasonable framework is clearly going to be a relief for the Indian market because unpredictability is worse than predictability even if the predictability means a little more tariffs and frankly India opening up its economy in some sectors which it may not have been willing to otherwise is long-term very good for the Indian economy 's health in terms of making it more competitive and more open," says Arvind Sanger Well, clearly, the US markets were off a little bit today because of this news about new round of tariffs or reinstatement of the old tariffs in some countries. Luckily, there is time till August one, so the markets did not fall too badly. They fell a little bit 70 bps, 70 basis points in the US S&P from an Indian market standpoint, it is good news. It is now the second or third time in the last few days that President Trump has tweeted that a deal with India is closed. So, hopefully, there is some common ground quickly found and India becomes… There has been a couple of countries that have signed these are all not very detailed but broad outlines. UK has signed one a few weeks ago and then last week, I think, it was Vietnam that signed a deal and now India seems to be lining up and I will be good. It will remove some of the uncertainty, but the reality is with President Trump nothing seems to be permanent and even if India signs a deal now who knows what might come up in the getting some reasonable framework is clearly going to be a relief for the Indian market because unpredictability is worse than predictability even if the predictability means a little more tariffs and frankly India opening up its economy in some sectors which it may not have been willing to otherwise is long-term very good for the Indian economy's health in terms of making it more competitive and more I mean, there is no question in my mind that President Trump does not want the kind of tariff turmoil that we saw after the April 2nd, it was announcement. So, clearly, there is no desire to have that kind of uncertainty and market turmoil and economic what President Trump is doing is trying to put some numbers out there to as they say focus the mind of some of these countries like Korea and Japan to name the two most prominent ones, of the ones named in today's set of new tariffs announced and so if that helps focus the minds of both sides to try to get a deal, there is some my sense is what President Trump and his team are realising is that it is easy to announce these big negotiations, but these negotiations are tough and there is a reason why trade talks take years. And these guys are trying to compress it in weeks. So, I would not count on August one as the last final chance. Maybe it is, but maybe it is far, as we have discovered from the taco kind of name that Trump has been given, I do not think he is interested in causing huge economic turmoil. Short-term a little bit is okay, but he is now looking for assuming that there are deals coming from India and maybe EU and maybe a couple of other countries, then the US markets should settle down and not be too unsettled. But if these promised deals keep getting pushed and pushed to the right and the fear grows that who knows what is coming, then the markets could remain hope and assumption is that India and maybe EU are on track to do deals in the near future in the next few days, hopefully by the end of the week. And if that happens, then to be more specific about the Indian markets should do focus really tariffs is in my opinion a sideshow once we get whatever the tariffs are, some deal on the table, the real issue for the Indian markets is going to be the monsoons are fine, but the economic fundamentals whether it is auto sales growth or other short duration factors that we look at, the data is not extremely encouraging in terms of a strong earnings quarter ahead of I think that the earnings will and the commentary from the corporates will be determining more importantly in my opinion as to what Indian markets do in the coming weeks rather than the tariff news.
