Us Slowdown Cold IMPACT It, Electronics, GEMS and Jewelery, Textiles, Pharma Exports: Vikram Chhabra of 360 One

Expert view: Vikram Chhabra, Senior Economist, 360 one assetSays India’s growth and inflation dynamics are favorite. He expects the RBI to cut the repo rate by 100-125 Basis points in the current rate-reduction cycle. In an interview with mint, chhabra also discuses the risk of stagflation in the us and how a slowdown in the US economy could affect Indian expenses. Here are edited excerpts of the interview:

What is your assessment of Inflation and Economic Growth Trends in India? Is the Worst Behind Us?

We believe India’s economy growth has bottomed out and is now entering a recovery phase.

The broader macroeconomic environment has also become aggregated supported.

First, the reserve bank of India (RBI) Has Eased Monetary Policy by Cutting The Repo Rate By 50 Basis Points and Infusing The Banking System with Surplus Liquidity.

Second, The Recent Income Tax Cuts Announced in the Union Budget are expected to Raise Household Disposable Incomes, Supporting a Rebound in URBAN CONSUMPTION.

Third, the India meteorological department’s (imd) Projection of an Above-Normal Monsoon Bodes Well for the Agricultural Sector and Rural Demand.

Meanwhile, inflation has an eased significantly over the past six months and is expected to remain broadly aligned with the 4 per cent target through fy26. Softer Crude Oil Pries and A Strong Rabi Harvest Further Reinforce The Benign Inflation Outlook.

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There is still significant Uncertainty Surrounding The India-Rus Trade Deal. Do you think a less favorite agreement with the US could have serial implications for the Indian Economy?

Bilateral Trade Agreements are inharently designed to be mutually beneficial, offering improved market access, Reduced Trade Barriers, and Policy Scon

We have high expectations for the India-as trade deal. It has the potential to strengthen India’s manufacturing sector by improvement access to the us market.

So far, India has only limited success in Penetrating the US Market.

Our analysis of un comTRADE DATA SHOWS That, Between 2016 and 2024, India’s share of us merchandise importants rose by just one percentage point, from 2 perom 2 per 3 per cent.

Meanwhile, China Continues to Dominate Us Imports Across A Wide Range of Product Categories, where India’s presence remains negligible.

A Well-Negotiate Trade Deal Could Provide the Necessary Impetus to Expand India’s Goods Exports to the US, Particularly as the US and China Clash Over Economic, Technological, and GEOPOLIGICAL Dominance, Accelerating the Decoupling Between the Two Economies.

What are your expectations from the RBI’s Monetary Policy? Is a rate cut of 100 Basis Points Possible in the Current Cycle?

The inflation Outlook remains benign, giving the RBI Room to Prioritise Growth. In Its April 2025 Policy, The RBI Projected FY26 Real GDP Growth at 6.5 per cent yoy.

We believe India has the potential to move to a higher growth training, which would require continued policy support.

Meanwhile, the external environment remain Volatile, with heightened geopolitical tensions, rising geo-economy fragmentation, and personality global uncertay, all of with pose downside downside downside Growth.

Against this backdrop, we see scope for further rate cuts of 50-75 Basis points. Thus, the current rate-cut Cycle Could Total 100-125 Basis Points, Bringing The Terminal Repo Rate Down to 5.25-5.50 per cent.

The US Fed’s Last Policy Statement Flagged Concerns Over Inflation and a Growth Slowdown Due to Tariffs. How Serious is the Risk of Stagflation in the US?

The US Economic Activity is Losing Momentum, Weighed down by tariffs and erratic policymaking.

GDP Growth Forecasts for 2025 Have also also been significantly revised downwards.

At this stage, the impact of tariff hikes on the us economy remains highly uncertain, as the measures themselves are fluid and will depend on the number of bilateral agreets the us is alive to Finalise.

However, if the announced tariff increases are sustained, they could push inflection higher, increase the risk of stagflation.

Consumer Surveys also Reveal Rising risks of stagflation, as consumer sentiment has declined while inflation expectations have increased.

How could a Slowdown in the US Affect Emerging Markets Like India?

A US Slowdown Cold Significantly Impact Certain Emerging Markets that are Heavily Reliant on Us Exports.

For example, our analysis of us census and imf data sugges that the value of merchandise expenses to the us amounts to Nearly 29 per cent of Vietnam’s GDP and ARONAM’s GDP and AROUND 12 PER CENT OF PER CENT ON PER CENT ON PER CENTNAM’s GDPP.

India, by comparison, is related better

However, a potential Us Slowdown Block Still Weigh on India’s Merchandise Exports, Particularly in Sector Such as Electronics, GEMS and Jewelly, Textles, Textles and Apparel, PHARUNUT, PHARUNUTS and Capital Goods.

More Notable, India’s Software Services Exports Are Likely to Be Significantly Impacted, Given Their Strong Dependence on the US Market.

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