India-US trade pact: ‘Deal removes hanging sword over rupee’

Top economists, fund managers and India Inc leaders reacted enthusiastically to the news about the end of months of uncertainty about a trade deal between US and India. Their reactions were varied: From strong nationalistic fervour, to how the deal has the potential to rejuvenate a global supply chain, to how the benefits could flow to the financial markets.

“India has done remarkably well to firmly stand its ground given the hostile geopolitical backdrop by getting the tariff rate down from 50% to 18%,” said Soumya Kanti Ghosh, member PMEAC, and group chief economic advisor, State Bank of India. “Importantly, India in the interregnum continued with ground reforms done and also completed the pending trade deal with the EU as well. This deal is the hallmark of a country that knows how to stand up, not get distracted by the noise and navigate even in the most difficult terrain in the interest of its own people.

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For long, Ghosh has been favouring a bold stand to counter the US’s demands for making a series of concessions that may not have been a win-win for both countries.

India Inc’s leaders also heaved a sigh of relief at the definite step towards a full-fledged India-US trade deal. “The India-US trade deal has gone through ups and downs like a roller coaster. While the devil is in the details, it removes a hanging sword over the rupee, equity and rates market,” said Nilesh Shah, MD of Kotak Mahindra AMC.

“Let us hope that it is a win-win deal for both the countries as they have a lot to gain through cooperation.”

According to Ashishkumar Chauhan, MD, NSE, this deal could have a larger impact for the trades across the world. “(It’s) a welcome move for global trade!,” Chauhan said. After Monday’s evening’s talks between the US President and the Indian Prime Minister, tariffs on Indian goods will come down sharply from 50% to 18% with immediate effect. (It’s) a big win for businesses, supply chains, and the India–US partnership.”