MC EXCLUSIVE India-US trade deal eases uncertainty, positive for markets, growth: DEA Secretary Thakur

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• India-US trade deal to reduce market uncertainty, boost investor confidence
• Economic impact of the deal will be clearer after final terms are shared
• Positive effect on GDP growth anticipated, but estimates not available yet

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The India-US trade deal should ease uncertainty that has weighed on markets and improve investor sentiment, though its economic impact will become clearer only after the terms of the agreement are finalised, Anuradha Thakur, Secretary in the Department of Economic Affairs, said in an interview with Moneycontrol.

Thakur said the pact addresses a key area of concern. “It does relieve us of the uncertainty in this space. It was mentioned in the Budget speech as well that there was uncertainty in the trade space. So, to that extent, it is definitely a positive development,” she said.

On financial markets, Thakur said clarity on the India-US trade front could help improve sentiment, particularly among foreign portfolio investors (FPIs). “FPIs, by their very nature, are very cyclical, and we have been seeing the impact. Also, the financial market is driven a lot by sentiment, so I would certainly say we expect a turn in sentiment on account of the certainty this brings. To that extent, it should have an impact on FPIs as well,” she said.

She said that her department will study the impact of the development once the commerce ministry shares the details of the agreement. “Once the detailed contours of the agreement are shared by the Commerce ministry with us, which will probably happen after technical processes are complete, because discussions have been underway at the technical team level, we will be able to assess the impact in a more granular manner,” Thakur added.

Thakur said it was too early to measure the effect on growth but indicated the direction was positive. “We do not immediately have estimates for the impact on GDP growth, as the trade deal has just been agreed,” she said, adding that the Budget’s growth projections were driven more by domestic drivers. “So, I don’t have numbers immediately, but this development should have a positive impact on GDP.”