India cushioning itself with trade deals amid global shock: HSBC's Pranjul Bhandari
New Delhi, June 9
As the world economies begin to diversify in the challenging environment as part of their China+1 strategy, India, which has seen an average GDP growth between six and six-and-a-half per cent in the last 12 years, is cushioning itself by signing several trade deals with advanced economies, HSBC's Chief India Economist Pranjul Bhandari said on Tuesday.
Talking to IANS from Singapore, she said that India's potential growth, at this point in time, lies in its ability to grow in a way that is sustainable.
"Once we have signed several trade deals with advanced economies, we may start seeing a lot more FDI coming into India. And, on the back of that, we manufacture more and export more. I think it's a great opportunity for us in a world of China +1, where the world is trying to diversify, looking for new partners of trade, looking for new places where production can happen," Bhandari contended.
On economic growth this year, the HSBC economist said this is a year of supply shock, energy shock, and it's not just limited to just that.
"In a few months, we will be hearing about the El Nino shock as well, which is likely to set in in the next couple of months. So, if you're going to have a double shock, energy shock and also El Nino climate shock, then it's very hard in a year like this to grow at a very rapid pace. And that's not just for India. I think it's about all the countries around the world," Bhandari told IANS, adding that all countries will have to pay the price of being in the midst of two supply shocks.
"Overall, for FY27, our India growth forecast is 6 per cent because it's two shocks coming together. We haven't yet started to see the growth shock in the data because it takes some time to show up. But my sense is starting September quarter, for about two to three quarters, growth could see, you know, a fair amount of moderation, because of the energy and food shock that we are in the midst of," the economist noted.
She said India has signed several trade deals in the last couple of months, which "gives me a sign that we are focused on it and we are taking it seriously".
— IANS
Reader Comments
Interesting perspective from HSBC. As a foreign investor, I've been watching India's trade strategy closely. The China+1 narrative is real, but implementation is key. India needs to improve ease of doing business at state level too, not just central policies.
My concern is that we are seeing growth at 6% while inflation is eating into household budgets. What good is GDP growth if common person can't afford vegetables and fuel? Trade deals are fine, but please also address domestic price stability. 😟
Finally some good news! India is playing smart by signing FTAs while world wants to move away from China. But we must also invest heavily in our own R&D and not just become assembly hub for others. Our engineers and scientists are world-class; time to show it.
Pranjul Bhandari makes valid points about dual shocks from energy and El Nino. Our farmers are already worried about monsoon predictions. Government should have robust contingency plans ready for food security. Trade deals won't help if people can't afford to eat properly.
As someone working in supply chain consulting, I see India's potential but also hurdles. Infrastructure at ports and last-mile connectivity still needs massive upgrade. Let's hope trade deals come with binding commitments from partner countries on technology transfer too.
P We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.