00:00If we don't get a deal, what are your expectations? What could the hit to the broader economy be?
00:08I think we're already seeing the impact of, you know, high U.S. tariffs because India's exports to U.S. have been contracting for the last couple of months.
00:20In some product categories, we've seen export diversification, but on the whole, there is pressure on the labor-intensive sectors in the MSMEs, particularly.
00:32So, you know, cash flow, profit margins for these companies is under pressure.
00:37CAPEX is getting delayed.
00:39I think over the medium term, though, as India tries to diversify its export, you know, we will see some diversification as an offset.
00:49But, you know, if India were to continue at a 50% U.S. tariff, then on an analyzed basis, we think that it could be around 0.5 percentage points.
01:01Nevertheless, when we look at the next 12 months, India has also seen a lot of counter-cyclical policy easing in terms of, you know, interest rate cuts, liquidity easing, macro-prudential easing in order to boost credits.
01:15So, I do think some of these factors will offset U.S. tariff over the next 12 months.
01:22And over the medium term, the focus remains on export diversification.
01:30Sonal, one quick question of, you know, exactly what you spoke of, supporting exporters and other reform measures by the government.
01:38It seems cognizant of this potential pressure on growth.
01:42And so, we've had, through the course of this year, the tax cuts, more recently the labor reform measures, you know, direct and indirect support to exporters.
01:51Is that going to be enough?
01:52And is there something else specifically that you're looking forward to from the government reform agenda point of view?
01:57I think a lot more in the direction of, you know, improving ease of doing business.
02:09So, I think, you know, the committee that has been set up in terms of decriminalizing a lot of the laws, we would expect more to come through on that front.
02:19On factor market reforms, we've seen the moves on the labor market that we could potentially see more on land reforms, for instance.
02:29Also, in terms of attracting more foreign direct investment into India in more sectors, inviting foreign investment in sectors like atomic energy, more investment in insurance, you know, allowing more investment in banking sector going forward.
02:46So, I do think a mix of ease of doing business reforms, factor market reforms, attracting more foreign investment, while trying to boost domestic demand and increase self-sufficiency on the supply chain and the GVC integration.
03:04So, it's going to be a mix of everything.
03:06But essentially, the signal here is that India remains open to business.
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