India won't be disadvantaged by Trump administration, could be a beneficiary instead: Prashant Jain

believes that far from being disadvantaged, India could emerge as a beneficiary of the new geopolitical and economic dynamics.

While global market experts are mixed on the potential implications of policies under the Trump administration, Prashant Jain, founder and CIO, 3P Investment managers, seems more confident on India’s position going forward.  Jain, in his latest newsletter, notes that Trump’s views on tariffs, taxes, deregulation, immigration as well as current dominance of capital markets, leadership in technology and innovation clearly suggest that “the world must brace for a break from the past.” But adds that he believes that far from being disadvantaged,  India could emerge as a beneficiary of the new geopolitical and economic dynamics.

Advantage India?

“Given the composition of India’s economy, with high consumption accounting for approximately 70% of GDP and low manufacturing exports at just 12 percent of GDP, India should not be disadvantaged,” Jain said. He also added that India’s current account deficit (CAD) of only 1 percent signals economic resilience. India’s geopolitical status and strong relations with the US, he believes also further enhances India’s ability to navigate potential challenges.

Markets had seen a mixed response to the victory of President-elect Donald Trump in the November 2024 US elections. While markets had initially seen some euphoria on Trump’s victory, there have also been  some concerns around the Republican presidential candidates focus on an "America first" policy, which included higher tariffs for countries looking to export to the US. While a majority of Trump's tariff rhetoric has been towards China, India too is expected to see some tariff repercussions. The IT sector is also expected to see some impact with tighter visa rules impacting margins for IT majors.  A third concern has been with regards to inflows coming into India. Some experts have raised concerns that with the stabilisation and strengthening of the US Dollar, foreign investors may pull out or stay away from emerging markets including India.

But Jain says that Trump administration’s commitment to boosting US fossil fuel production by 3 million barrels per day (mbpd) could exert downward pressure on global oil prices and be of advantage to India. “If oil prices move lower, as recent trends suggest, it would work significantly to India’s advantage,” Jain said. Over the past six months, oil prices have already dropped from $88 to $74 per barrel. What he means is that for an energy import-dependent country like India, this could ease inflationary pressures and reduce the cost of oil imports.

While Jain agrees that it is difficult to predict exactly how the policy acknowledging the inherent unpredictability of policy outcomes he says that India’s economic structure and geopolitical positioning suggests that India is well-placed.