New Delhi, Nov 12
As US President-elect Donald Trump begins raising the pitch around imposing tariffs amid his 'America First' policy, he realises that India -- on a robust growth path under Prime Minister Narendra Modi -- is an important component to his economic agenda amid the China factor, ace investor Mark Mobius said on Tuesday.
In an exclusive conversation with IANS, Mobius said one of the benefits of the imposition, or at least the threat of higher tariffs, is that it brings people to the table.
"That means that Indian and US negotiators will sit down around the table and say, okay, let us work out a programme where it's fair for both sides, where the US can have access to the Indian market and Indians can have access to the US market. And that will probably lead to a trade agreement which will be beneficial for both sides," he explained.
A robust US economy means stronger US companies and these firms under Trump will have the ability to not only invest at home but abroad and "you'll see more of this investment coming into India", Mobius told IANS.
"Of course, you must not forget the China factor. That's why India is a very important balance, given the power of the Chinese, and India is the only country that can eventually act as a balance from that kind of power," the global investor stressed.
According to him, one of the reasons why Trump has imposed or wants to further impose big tariffs on China is because China is seen as not obeying the World Trade Organisation (WTO) rules and taking advantage of these rules to benefit their own economy, and that has created a lot of resentment in the US.
Trump's return to power sends out the message to the world that he would now put the domestic economy on a faster growth path with a number of fresh measures.
"First, of course, will be the tariff measures. Now, a lot of people believe that tariff measures will be negative, not only for foreigners around the world but also for us consumers. But the fact is, the main benefit of the tariffs will result in more income for the US government, which will reduce the deficit, and most of the businesses around the world will be able to adjust to these measures eventually," said Mobius.
The businesses will also have to change their supply channels under Trump.
However, "I don't think the impact will be that great but at the end of the day, the lower taxes which President Trump is going to impose on companies in the US will result in overall costs coming down, in addition to, but even more importantly, the reduction of the bureaucracy".
The US President-elect is determined to cut down on government interference in businesses and that will lower costs quite significantly and the impact of less bureaucracy will be bigger than lower taxes. "So these factors are going to result in higher US growth and productivity which would be good for the world, as America is a major buyer and exporter around the world, and many countries will benefit from that, and India, of course, is to be a beneficiary of this trend," Mobius told IANS.