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Economic Times
2 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
2 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.
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)
Time of India
02-05-2025
- Business
- Time of India
Will the party continue in the Indian market? Arvind Sanger answers
Arvind Sanger , Founder, Geosphere Capital Management , says India is poised to finalize a trade deal with the US swiftly, potentially being the first. While recent March quarter figures weren't outstanding, improvements in incremental data could make India's FY26 growth narrative compelling. Despite near-term global trade war concerns, non-consensus moves in gold, US markets, or the dollar are possible, potentially impacting emerging markets and other outperforming regions like Europe and Japan. We will talk about autos and we will talk about EVs, but in general, April has been a good month for Indian markets. Will the party continue? Arvind Sanger: Obviously, things that went well for India in the trade war. India was seen as a winner. Secondly, the US dollar was weakening and investors were looking to diversify away from the US. Those were some very powerful trends that India benefited from. Now, if the US starts to sign deals with a number of countries and the market starts to stabilise, then maybe even the dollar starts to stabilise and the big kahuna is what is going to happen with China. Clearly, the signals from the Trump administration are very clear. The US wants to do a deal with China and China has been playing a little bit of a tough game as they are trying to get a favourable positioning pre-talks to be able to do a deal. But if May is the month where some kind of a China deal is struck with significant reduction in tariffs – even if they end up at 50% or whatever – then we could see at the margin both the dollar stabilise and maybe China benefit a little more. So, very short term, it could cause some money to flow in those two directions. But directionally, it is looking like India is going to get a deal done very quickly. It may even be the first one. That is nice, but that is not the real story. The real story is what is going on with the India growth story. Obviously, the March quarter numbers have not been stellar. But if we see incremental data at the margin starting to improve, then the India growth story for FY26 starts to look interesting and that is really going to be the determinant beyond the very near-term noise of global trade war as to how the Indian market does. Do you see a case where in the near term like a couple of months, maybe for a quarter or so, emerging markets could underperform and developed markets could come back because this whole script of why the US will not do well and why EMs should do well is becoming public knowledge now? Arvind Sanger: Yes, it has become a bit of a consensus trade. I do not know if it will last the anti-consensus trade, or whether that will last for a whole quarter, but it certainly could last for a month. It is often said that the maximum pain markets move in opposite directions to inflict pain and if the consensus is so widely in one direction, then it is quite likely that you could get a non-consensus move, a non-consensus selloff in gold, or a non-consensus rally in US markets, maybe even a non-consensus rally in dollar. Live Events You Might Also Like: Rs 37,600 crore in 11 days! FIIs are flooding Indian stocks with cash but will it last? Again, these are very short-term trends, but it would not surprise me that what has happened in the last few days in the US market continues for a bit and that does take some of the bloom off the emerging markets' frenzy and frankly even Europe and Japan have outperformed. So, we could see a bit of a non-consensus trade happen for a few weeks, but fundamentally long term it may be a different story. Near term, who knows? Your call is quite interesting that we could get a non-consensus move in US markets. The way the global setup is looking at this point in time, we are marred by volatility and you were also talking about how the market rally will now be determined going ahead. One key point to note is the way how the foreign investors are allocating their funds. There is too much uncertainty. There will be an economic impact as well and that money is now slowly once again trickling back into India and emerging markets. India was not that much of a preferred bet for them. But do you think now decisively that money will continue to come into India given the relentless FII buying over the last 10 odd days? Arvind Sanger: You have to step back a little bit and look at the length of these cycles. From the beginning of '99 through the end of 2007, Nifty was up like over 500%. The US market was up 50%. So, this is not new that you get this massive cycle. Look back at the data for that eight or nine years for the Indian market and the Chinese market did even better. So, EMs had a huge run in that period and the US market did nothing and it was not like the US economy was in the toilet or anything like that. These cycles went on for a long time and then in 2009, the US had the financial crisis. The US financial system had almost gone bankrupt and after eight or nine years of huge underperformance by the US, who would have said that for the next 15 years the US market would beat every other market in the world? So, these cycles last for a long time. But within those cycles, it is not a straight line. You will have months and quarters where you get counter cyclical moves. If you ask me to tell you whether the counter cyclical move would be short term or medium to long term, I would say medium to long term. I do not know if India will be the big winner or some other emerging market will be the big winner. When the US market moved up by the end of last year, 50% of the world's market cap was in the US market. That was the peak that we came last in 2000 and at the end of 2024. These cycles tend to have long legs for a long period of time and India and other emerging markets that do well in terms of economic performance are poised to benefit from funds flow redirecting to a more normal long-term cycle because these cycles turn and then they go for a long time. You Might Also Like: US dollar declining, global markets decoupling from the US market: Rupen Rajguru
