For India, the US tariffs could present an opportunity—provided the government implements major reforms to enhance factor competitiveness in land, labour, and capital, said Pramod Gubbi, Co-Founder of Marcellus, in an interview with Moneycontrol.
According to him, the rationalisation of GST reflects a growing recognition by the government of the need for critical reforms. In a similar vein, the gaming ban and measures to curb F&O trading appear aimed at redirecting household savings and consumption toward more productive avenues.
More importantly, he believes that reforms to improve ease of doing business and eliminate compliance and regulatory bottlenecks are essential to unlocking the private sector’s animal spirits— spurring investment and job creation.
Do you strongly believe that GST rationalisation will boost demand and help India achieve 6.5% growth in FY26?
Yes, at the margin this will give a much-needed boost to middle class consumption, which has been weak for sometime now. Whether that will help get to 6.5% growth depends on how other factors play out, particularly the external sector given tariff headwinds, as well as public capex given fiscal consolidation amidst weak tax collections and a somewhat inexplicable lack of take off in private sector capex despite strong corporate balance sheets, low interest rates and plenty of liquidity.
Besides GST rationalisation—which many experts consider a significant move—do you expect further reforms from the government?
Yes, clearly, the GST rationalisation suggests a realisation on behalf of the government to undertake much-needed reforms. In some sense, the gaming ban and steps to curb F&O trading appear to divert household savings and consumption into more productive areas.
More importantly, reforms to ease business, remove compliance and regulatory bottlenecks are required to unleash animal spirits in the private sector to spend and create jobs. And these steps need to be radical and not just incremental, given the structural headwind for job creation from growing automation and AI across various sectors.
Will a GST rate cut be a major boost for the auto sector?
Yes, the auto sector should be an obvious beneficiary, and there will likely be demand pick up at the margin as lower GST will likely lower the cost of ownership of vehicles. But more sustained growth will depend on steps to boost job creation and consequent income generation and purchasing power.
In a previous interview, you highlighted the risk of unemployment. Do you expect a significant improvement going forward, given the government’s renewed focus on stimulating demand and the economy, especially amid rising tariff risks?
Like I said, we need radical reforms to boost job creation. The good news is that the private sector is in good shape in terms of its ability to invest and create jobs. The need is to reduce bottlenecks and dramatically improve the ease of doing business.
Do you believe foreign institutional investors (FIIs) will return to India if earnings growth materialises in the second half of FY26?
Not sure of the timing, but yes, if valuations become more attractive due to forward earnings prospects improving or a meaningful price correction, we could see FIIs finding interest in India as the long-term macro story is still intact. The only thing holding them back is that, relative to other markets, the valuation-earnings growth combination is simply not attractive enough in India.
Do you believe that higher tariffs are a game-changer or a spoiler for the United States in the medium to long term? And for India, could this present a major opportunity despite posing short-term risks?
Any policy that creates a hindrance for efficient utilisation of global resources through restriction on free movement of goods, people, and capital is a spoiler for the global economy in general and the US in particular.
We can only hope this is a passing phase and better sense will prevail eventually, given how much prosperity globalisation of the last few decades has created across the world. For India, this could turn into an opportunity if we can execute major reforms to build factor competitiveness in land, labour, and capital.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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