US President Donald Trump's tariffs have been unpredictable, but India is well-placed as an alternative to China for investors, providing unique advantages that competitors cannot match, former Reserve Bank of India Governor D Subbarao said on Tuesday.
India has a potential advantage, such as a "trade diversion", as tariffs imposed on China and east Asia will shift the trade to India as seen during Trump's first term, he told NDTV Profit.
Since India's exports are relatively low, it will likely offer some protection. Historically, India's economic progress has been closely tied to its export performance, and exports are crucial for the country's growth and welfare, according to Subbarao.
"While India is relatively less impacted by these issues compared to many other nations, it would be misguided to assume the country remains completely unaffected," he said.
The former RBI governor raised concerns extending beyond tariffs, pointing out a 60% chance of a recession in the US.
Echoing Subbarao's sentiments, Maneesh Dangi, chief executive officer of Mosaic Asset Management, said a 60% US slowdown, potentially worse, could affect India.
Dangi also warned that if China stopped exporting goods to the US, it could result in excessive dumping of goods in India, creating a "deflationary force".
"Additionally, there may be a reversal of Covid-era trends, with disruptions in both supply and demand due to ongoing demand destruction," he said.
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