As India's global positioning strengthens, particularly in the Trump 2.0 era, a rising concern could be the possibility that China could emerge as a major beneficiary if the regional conflict involving Pakistan escalates, said Trinh Nyugen.
The senior economist covering emerging Asia from Natixis told NDTV Profit that India has emerged as a "big winner" on the global stage, but warned that the stakes are high. "India has a lot to lose relative to Pakistan in this conflict — not just the progress it has made so far, but the potential to be the centre of the supply chain," she said.
Nguyen pointed to the Modi government's more outward-looking growth approach this term, especially with regards to the India-UK trade deal. "It's an important point to highlight: the willingness of the Modi government to look outward for growth," she said. However, the US-India deal could prove to be a much tougher negotiation, she added.
Last week, Prime Minister Modi had announced that India and the United Kingdom had concluded the free trade agreement, which was under negotiation since January 2022.
According to Nguyen, the global trade ecosystem remains delicately balanced. "We're in a very fragile environment globally and geopolitically and it's important to be mindful of the costs. If the Pakistan conflict escalates severely, the big winner would probably be China," she said.
Nguyen also flagged how interconnected the US is with global supply chains. "The US may be the biggest consumer of global goods, but it does need others to maintain supply chains because US companies are very, very interwoven with regional and global supply chains," she noted, adding that any disruption could significantly impact the US industrial sectors.
While there is time to negotiate tariff-related issues, Nguyen said the conversation is far from over. "On sectoral terms there is potential for tariffs to be lowered. Though the worst of tariffs are over, they are not totally behind us," she said.
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