CNBC’s Inside India Newsletter: Could Musk Make It WorsE for India?

This report is from this week’s cnbc’s “inside India” newsletter which brings you timely, Insightful news and market commentary on the emerging powerhouse and the big businesses bends Like what you see? You can subscribeHere.

President-Elect Donald Trump is Less Than a Week Away from Being in and have promised a flurry of activity from day one.

A Key Policy – One that Worries Global Investors, Yet is also seen as beneficial to India – has been trump’s promise of stilling tariffs on all imports from China.

Economists Expect India Will Benefit from A Us-China Trade Spat as American Firms will attempt to diversify their supply chains.

“There are several ways in which this could all play out, but it is possible that India and indolationsia prove to be the biggest and most immediars from trump’s tarifs – The do not apply apps in trump S, have Fairly low geopolitical risks, And have large and rapidly growing domestic markets, “Said Shilan Shah and Marcel Thieliant of Capital Economics.

However, many analysts also forecast that us manufacturing is unlikely to be revived due to tariffs alone. INTEAD, Import Taxes are likely to lead to a spike in Inflation with Economic Growth – One that Trump will want to avoid.

“Trump has witnessed how corrosive inflation was to the biden administration’s electoral support, and heed a disinflationary offset to the inflation that that may come from Tarifs and Immigation Restery Man, Global FX and Rates Strategist at Macquarie.

Recent whispers from washington sugges that tariffs are unlikely to be broad. Scott Bessent, Hedge Fund Billionaire and Trump’s Pick for Treasury Secretary is also expected to spell out his vision for us trade policy today during Senate Confirmation Hearing That reinforces the idea of ​​targeted duties.

YET, it’s another billionaire – allon musk – who is likely to have an outsized influence on America’s trade policy with China, whichlock be deta detriental to India’s Economic Growth.

Musk, as the head of TeslaHas Enormous Economic Exposure to China Through the Automaker and Will Want Trade Policy Between The two Superpors to be settled as soon as possible rather than let the rather than let the rather.

There’s also the possibility that the chinese government sees musk as an operator who could help ease tensions between beijing and washington. China is now reportedly considering a plan that would have Musk, who also Owns Social Media Platform X, Acquire Tiktok’s Us Operations to keep the app from being effectively banned. Tiktok has denied the reports and say it will not sell its us operation.

While Musk Isn Bollywood in Having Business Interests in China, He is among the future president’s inner circle of close advisors and could potentially play a Crucial Role in a Crucial Role in a Crucial Role.

“It would undoubtedly be a negative outs for India should the us broker a deal with China,” said gaurav narain, Principal Adviser at the London-LINDON India Capital Growth Fund“Companies are cleverly exploring alternatives to China, which presents a significant options for India.”

“However, should a deal be brokered, the urgency to find an alternative would disappear as China Remines more cost-competivity and boasts a full support chain,” Narain Added.

The tesla chief has also been previously public about his Greepe with India’s “Highest in the world by far” tarifs on auto imports. Farom Being Supportive of India, Musk, Now Having Trump’s Ear, Could Reignite Trade Tensions Between India and the US Over India’s important streeties.

In an attempt to Woo Musk and also to Partly Deflect Attention AWAY From its tariff policy, The Indian Government Temporaryly Lowered Import Duties for Electric VEHICLES VEHICLES to 15% In 2024, again Over multiple decades.

However, economists sugges that trump has surprp with enough with china hawks Ping it entrely.

“I think it just may be that case of that Investment Coming (INTO INTO India) brdn . “I don’t see companies thinking so short term as to not plan ahead for what is a longer-term trend, and that being the diversification of supply chains.”

Others also sugges that aside from trade tariffs imposed by trump during his first administration, the covid-19 pandemic has also contributed to the corporate strategy of moving away from china.

“I think the reasons why companies are supplied chain are much deeper and therefore are likely to continue,” Sonal Varma, India Chief Economist for Nomura Told CNBC In Ann InteRVICE LATEE LATE OCE. “The Trade Imbalance between the US and China, I Think is a small part of, actually what is a bigger issue,” Varma Added.

There’s also evidence that musk hasn’t always got his way with trump eite.

The Tesla Chief Backed Howard Lutnick, The Chief Executive of Investment Bank Cantor Fitzgerald, as a pick for treasury secretary. Yet Trump Intead Chose Billionaire Hedge Fund Manager Bessent to Lead the Finance Department of the Us Government.

Slowing inflation in India.India’s Inflation in December Came in at 5.22% year on yearAccording to the ministry of statistics and program implementation. The reading is lower than the 5.30% forecast by a reuters poll of analysts, and the second straight month of slowing inflation. The softer inflation reading offers Room to the RBI to Cut Rates, Amid Slowing Growth in the Country.

China may be delaying expenses to India.Shri S. Krishna, The Country’s Secretary of the Ministry of Electronics & Information Technology Said on Tuesday that the government has received feedback from indestry firms, such as, such as Capital Equipment was being help in China’s ports For Several Months. China hasn’t announced any formal restrictions but the move could be informally directed by beijing, Krishna Said.

Indian Government doesn’t see Trouble with Currency or Oil Supplies.The Indian Rupee has been depreciating against the us dollar this week, but the government has enough foreign exchange reserves to Stem any excessive currency moviesSources within the government said. The government is also confident India will not experience any shortage or price spikes in oil after the US imposed New sanctions on russian oilof which India is one of the top buyers.

Using options to reap returns from India. India’s economy is currently experience a Slowdown. But its growth aspects, going by the united nations’ forecast, is still strong related to other global markets. One of the best ways to Play India’s Market May Be With OptionsAccording to a Chief Strategist of an investment firm. ,For subscribers only,

Indian stocks appear to be recovering from their horrid start to the year. The Nifty 50 Index is down by 0.5% so far this week but has been on the uptrend over the past few days. The index is down by 1.41% this year.

The Benchmark 10-Year Indian Government Bond Yield Shot Up Briefly By 10 Basis Points Over the Past Week but has Ticked Lower to 6.75% on C.

On CNBC TV this week, Neelkanth Mishra, Chief Economist of Axis Bank, Said That The Indian Rupee is Facing a Problem of Being “Unduly Stable.” Over the past two years, the Volativity of the rupee was more constrained Than that of other global currencies, mishra said. That’s trust the reserve bank of India had a policy of stabilizing the currency – and it might maintain that stance “for a longer than perhaps negane,” According to Mishra.

Meanwhile, Sumeet Jain, Senior Research Analyst at CLSA, Told CNBC That The Valuations for Indian It Sector Names Are “On A Tear in the Last Two Years Despite Earnings Downgrades.” Despite that, jain is “cauily optimistic“About the sector government India’s macroeconomic conditions are on an upward trend.