India’s tariff worries may ease, but clarity still key for companies: Allspring’s Prashant Paroda

India and the US are nearing a trade agreement that could bring greater clarity for businesses and investors, according to Prashant Paroda, Portfolio Manager for Emerging Markets at Allspring Global Investments.Referring to the ongoing discussions, he added that if the final terms are similar to what Indonesia received, “hopefully we can get across the line this time.” For companies, he noted, concluding would help them “move along now” with more certainty.
Paroda suggested that markets may have already priced in some of the expected tariff terms. “If it’s closer to what the Indonesian terms are, that’s pretty much priced in with some of the markets.”
He also pointed out that the current version of US trade policy is stricter compared to the previous one. In Trump 1.0, there was a lot of transhipment that went along, and a lot of that has been curbed in this Trump 2.0 trade deal, he said.For Indian companies, he emphasised, competitiveness will be driven more by unit cost than transhipment strategies.

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On inflation, Paroda said that recent consumer price index (CPI) data showed an increase year-on-year (YoY). However, tariffs haven’t had much impact on prices yet. “In October-December quarter and January-March quarter, it will become clearer, especially from the Fed’s perspective, whether inflation is under check or rising a bit.”

On Indian markets, Paroda said a selective approach is important. According to him, within banks, one will have to be very selective with which companies are continuing to grow market share and have provisions under check.

He also highlighted improving trends in cement. “The price war that was happening over the last 18 months seems to have abated, and there’s more price discipline.”

In telecom, he expects larger players to continue doing well.

Paroda added that forward-looking commentary from companies will be critical. “You might have had a bad quarter last quarter, but the commentary going forward will be very essential for us to make bets from a 12–18-month perspective.”

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Paroda said Axis Bank’s recent decline may be viewed as a one-off.

He also noted that Allspring continues to hold positions in large private sector banks. “They haven’t worked as well the last few years, barring a few. So this is some catch-up. We think they’re going to meet or beat consensus estimates.”

Paroda said demand for renewables in India remains strong. However, he cautioned that policy constraints could pose challenges for companies exporting to the US.

For the full interview, watch the accompanying video

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