Even as there is increased buoyancy in sentiment relating to doing business in India, with industrialists such as Ratan Tata reposing their faith in Prime Minister Narendra Modi’s ability to deliver a “New India,” global research firm, JP Morgan says that there is high cost of doing business in India, which poses an issue in the emerging markets. In an interview to CNBC TV18, Jahangir Aziz of Head of EM Asia Economic Research at JP Morgan said, “The reason why India could not get onto the global trade recovery is that globally we have massive amount of excess capacity and we need to go two steps ahead if we are going to take market share away from the usual suspects, China etc. that is where the problem has been. The cost of doing business hasn’t come down in India.” According to data from the World Bank, India ranks 130 in ease of doing business in 2017.
Sharing his views on the Indian economy, he said, “Recovery in India is very mild and modest. It is not a recovery that people would get excited about.” Further, the expert says that the EM’s have been slowing down since 2012, and India is now going in the “other direction”. “Emerging markets are relentlessly slowing down since 2012-2013. India did reasonably well till 2015-end. Then they took off and we have been going on the other direction,” he pointed out.
Earlier this month, Adrian Mowat of JP Morgan said that India is an expensive market with downgraded earnings. In conversation with CNBC TV18, the chief emerging markets and Asian equity strategist said, “I’m concerned about India’s relative earnings revisions. Broadly, emerging markets have upgraded earnings in the last six months. But if you look at India, we’ve had downgrades.” Adrian Mowat says that he’s neutral on India. “India is a market we’re fundamentally anxious about,” he said.
Talking about his neutral stance in India, he explained, “Reason we are not underweight on India in our emerging market portfolio is that flow of household savings into equities remains very strong.” The MSCI emerging markets index is up by 23% in the year so far. The BSE Sensex has returned 21% in the same period.