The Finance Minister Nirmala Sitharaman expects the India-US trade deal to improve capital inflow and investor sentiments as well as benefit labour-intensive export sectors.
In an exclusive conversation with Financial Express, Sitharaman said, “Investors are like weathercocks; they move in the direction of sentiment. Sentiments will change. Money flowing in will happen now, much more than earlier.”
Too early to revise GDP growth assumptions: FM Sitharaman
On expectations that the trade deal could add 20–30 basis points to GDP growth next year, the finance minister said it was too early to revise assumptions.
“You need to know the entire details of the deal (to make any revision in growth projections)…The Budget is fairly infused to take care of such situations — uptick or downtick.” Sitharaman said.
The Budget is not an incident-specific event. It is for the whole year and cannot hinge on one particular incident. So, even if the agreement had happened the day before, I wouldn’t have changed it.
‘Exporters to retain new markets and expand in US as well,’ says Sitharaman
Sitharaman added that labour-intensive export sectors along with marine products, textiles, jewellery, leather, footwear and shrimp export will be the key beneficiary of tariff reduction.
Sitharaman said labour-intensive export sectors would be the first to benefit from the reduction in US tariffs. She noted that these sectors had already shown resilience even when tariffs were high by exploring new markets.
“When the tariffs were increased, after a bit of initial struggle, they found alternative markets. If you see their numbers, they are on the positive side despite the tariff,” she said.
With the US market opening up again at a lower tariff rate, these sectors are expected to gain further. “18% is far lesser than our competitors, these sectors will start to gain immediately,” she said.
Sitharaman added that exporters will retain the new markets they discovered while also expanding again in the US.
India-US trade deal timing would not have altered Budget: FM Sitharaman
On the question of weather the Budget would have been different if the trade deal would have been announced before the Budget Sitharaman said, “The Budget is not an incident-specific event. It is for the whole year and cannot hinge on one particular incident. So, even if the agreement had happened the day before, I wouldn’t have changed it.”