The Donald Trump administration issued an official notification in the early hours of Tuesday, Indian time, that the imposition of additional 25% tariff on imports from India, will take effect from 12:01 AM Eastern Time on August 27.
Mobius believes that India will be “okay” despite the impact of these tariffs, as the overall impact seen on India’s economy is only between 0.5% to 0.75% of its GDP. He expects the Pharma, Garment and Gems industry to be hurt due to these moves.
The veteran Emerging Markets investor believes that despite the tariff pressure, India as a market will continue to do well over the long-term, and the Nifty would also begin its outperformance soon. The Nifty 50 index has had no returns over the last 12 months, having made a record high of 26,277 in September last year.
He is also hopeful that the pressure from these US tariffs could bring change to India’s taxation system and the subsequent reforms push could help the Indian economy grow at a better rate.
However, Mobius did say that although he has reduced his cash portfolio in India to 25%, he has turned more cautious on putting more money to work in the Indian markets.