India is not decoupled from Donald Trump’s tariff risks but it is in a good spot to take over the supply chain from China, says Mark Mobius, chairman of Mobius Emerging Opportunities Fund. The veteran investor believes that India needs to act quickly to take advantage of the global supply chain shift away from China.
In an interview with ET, Mobius said that India needs to swiftly reduce bureaucratic hurdles in investment and trade processes.
‘India in a very good spot’
Asked whether India can remain protected from the trade war, Mobius said, “Everybody is in the same soup. Nobody can generally escape. India will be entangled more in the global trade war because it will become a major supplier going forward.”
“India is in a very good spot. It is in a position to take over the supply chain from China. But India has got to move quickly to liberalise the system for investment and also liberalise its trade system,” Mobius said.
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According to Mobius, for companies to engage in exports, they need seamless access to import machinery and essential components. Currently, the complex bureaucratic procedures in India make this process challenging for businesses, he opines.
Simplifying these administrative processes would attract international corporations like Apple to establish manufacturing facilities and commence production operations in India, he added.
Global Stock Market & US Economy Outlook
Regarding market uncertainties stemming from Donald Trump’s inconsistent tariff policies, he said that the situation remains complex. “He (Trump) has got a pile of trade deals to sort out before his 90-day timeout on some tariffs runs out. And let’s face it, when you are negotiating, you have to give something to get something. People who have worked on trade deals in the past say this kind of rushed timeline brings all sorts of complications and roadblocks.So, brace yourself, the market is likely to get even shakier,” he warned.
Regarding the US economic outlook, Mobius said that a recession appears likely, particularly due to insufficient money supply growth. However, this downturn is expected to be relatively brief, lasting approximately one quarter. The Trump administration will likely implement measures to prevent a prolonged economic decline, he said.
Also Read | Apple looks to manufacture more iPhones in India as Trump’s tariffs hit China harder: Report
‘China in big trouble’
According to Mobius, China is in ‘big trouble’. He is of the view that China faces significant economic challenges at present. The nation has developed remarkable infrastructure throughout the country, yet finds itself vulnerable due to its heavy reliance on US trade relations, he cautioned.
“They are trying to get around it by transhipping to other countries like Vietnam and even India. The US realises that and is cracking down on China’s behaviour. Internally, China also has its own set of challenges, particularly between China and Taiwan, adding to the uncertainty. We are cautious about China because of the trade war, and the geopolitical tensions only make the outlook more uncertain,” he said.
