MC Interview: US-India trade deal boosts earnings visibility for select sectors, says Artha Bharat founder

Sachin Sawrikar is the Founder and Managing Partner of Artha Bharat Investment Managers IFSC LLP

• Deal should support higher cross-border investment flows
• Deal constructive for the rupee over medium term
• Chemicals, specialty manufacturing, engineering goods, technology services, and select consumer exporters could see improved earnings visibility

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“The India–US trade agreement is a decisive step that strengthens one of the most important global economic partnerships by improving market access and reducing policy uncertainty,” said Sachin Sawrikar, Founder and Managing Partner of Artha Bharat Investment Managers IFSC LLP, in an interview with Moneycontrol.

While the agreement meaningfully improves earnings visibility for select industries and accelerates the integration of Indian companies into global supply chains, he believes it is not an overnight or broad-based game changer for equities.

According to him, the impact of the deal is likely to be incremental and sector-specific rather than a sweeping catalyst for overall earnings growth.

What is your take on the India–US trade deal that has finally been signed? Is it a major game changer for equities and earnings growth?

The India–US trade agreement is a decisive step that strengthens one of the most important global economic partnerships by improving market access and reducing policy uncertainty. It creates a more investable environment and enhances trade predictability, particularly for export-oriented and manufacturing-linked sectors.

While it meaningfully improves earnings visibility for select industries and accelerates the integration of Indian companies into global supply chains, it is not an overnight or broad-based game changer for equities. The impact is likely to be incremental and sector-specific rather than a sweeping catalyst for overall earnings growth.

Do you think this could be a strong trigger for FIIs to return to India with a fresh inflow of dollars?

The agreement should support higher cross-border investment flows and deeper institutional participation over time by strengthening India’s global economic signal and reducing policy uncertainty. It is constructive for the rupee over the medium term through stronger trade and capital inflows, which can reinforce positive sentiment among foreign investors.

However, FII flows are ultimately driven by broader global factors such as US interest rates, liquidity conditions, risk appetite, currency dynamics, and relative valuations. The deal adds to the positive structural narrative but is unlikely on its own to trigger a sustained surge in dollar inflows without supportive global macro conditions.

Following the India–US trade deal, are you now comfortable adding export-oriented stocks to your portfolio?

The trade deal justifies selectively revisiting export-oriented and manufacturing-linked companies that benefit from improved market access, regulatory cooperation, and deeper integration into global supply chains.

Sectors such as chemicals, specialty manufacturing, engineering goods, technology services, and select consumer exporters could see improved earnings visibility. That said, portfolio additions should remain firmly grounded in fundamentals, balance-sheet strength, execution capability, and sustained global demand, rather than being driven by the trade agreement alone.

How would you summarise the budget in one line?

It was a market-oriented budget that strengthens India’s capital-market architecture and global investor access, though we don’t like to rate budgets as different measures matter differently to different stakeholders.

Is the budget conservative in its overall approach?

The budget is conservative and pragmatic, prioritising fiscal discipline, policy continuity, and macro stability. At the same time, it is progressive on capital-market reforms, with measures like higher PROI investment limits and greater tax certainty for non-residents, reflecting a credibility-first approach rather than aggressive fiscal expansion.

Has the budget placed greater emphasis on the services sector?

Compared to the previous budget, there is a broader recognition of the services sector. While manufacturing and capex remain core pillars, the budget places clear strategic emphasis on services such as healthcare, tourism, logistics, skilling, and digital infrastructure, alongside financial services and capital markets. Measures to strengthen IFSCs like GIFT City and improve access for overseas investors show that services, especially financial services, are increasingly central to employment generation, inclusive growth, and sustaining long-term capital inflows.

Has the budget done enough to drive large-scale employment creation?

The budget supports employment indirectly by focusing on manufacturing, MSMEs, services, and capital formation, but it stops short of a large, explicit job-creation push. The emphasis on investment efficiency and long-term growth should support jobs over time, but the impact on large-scale employment is likely to be gradual rather than immediate.

Will the increase in STT on derivatives impact trading activity?

The increase in STT is intended to curb excessive short-term trading, but the immediate effect is that the breakeven threshold for derivatives trades has widened. This could increase losses for retail participants, who already tend to lose money in this segment. The move may reduce volumes at the margin but is unlikely to materially change market structure. A meaningful shift toward cash markets and long-term investing will depend more on tax stability, transparency, and return visibility than on transaction cost increases alone.

Are you bullish on segments where growth is expected to accelerate post-budget?

Data centres, electronic manufacturing, and biologics remain structurally strong themes, benefiting from AI adoption, supply-chain diversification, and rising global demand. The budget reinforces these long-term drivers through a focus on capital efficiency and investor access, but sustained momentum will depend on execution, regulatory clarity, and stable capital inflows.

What is missing from the budget, and what stood out as a surprise?

The most surprising element was the tightening of derivatives taxation and the removal of capital gains exemption on Sovereign Gold Bonds, as retrospective changes undermine tax certainty and contractual trust. Broader clarity and rationalisation of capital gains taxation remain missing. On the positive side, easing ownership limits for overseas investors and improving tax certainty for offshore funds materially enhance India’s investment attractiveness.

Has the budget done enough to attract FII inflows?

The budget reinforces India’s macro and policy credibility through measures like higher PROI investment limits, MAT exemption for non-residents, and strengthening GIFT City, which support long-term FII interest. Near-term inflows will remain constrained by rupee depreciation, equity underperformance, and unresolved capital-gains tax issues, highlighting the need for consistent implementation, currency stability, and predictable tax policy.