India’s Growth Story Intact, Ideal Time for Long-Term Investment: Keki Mistry

While many welcomed the U.S. decision to withhold tariff impositions and felt reassured about the reduced risk of a global recession, veteran banker Keki Mistry, who serves on the boards of several prominent institutions, including HDFC Bank- highlighted India's strong position amid global trade concerns. “In my opinion, the Indian markets are very strong, and I do not think we need to worry. Personally, if I was looking at investing, I would think this is a good time to invest for the long term,” he stated, acknowledging the presence of short-term volatility.

According to him, the overall impact of trade tariffs on India would be limited, as the country is not yet a major exporter and its growth narrative is primarily driven by the domestic economy. “So long as we are able to continue creating jobs for the young people fresh out of college campuses each year, our economy will keep on growing,” he remarked.

Commenting on market behavior, he noted, “The markets are overreacting, but that’s typical, they always tend to overreact in times of uncertainty.”

Emphasizing the importance of viewing India’s position in a global context, Mistry remarked that “we need to look at ourselves not in isolation but on a relative basis,” adding that the tariff debate has been “overblown.” Although tariffs have been withheld for now, he pointed out that a quick back-of-the-envelope calculation reveals “the reality of the matter is that exports are not a very large part of India’s Gross Domestic Product (GDP).”

Considering that exports account for 21 percent of India’s GDP, and exports to the U.S. make up just 17 percent of that, Mistry estimated that the direct impact on India’s GDP would be limited to around 40 to 50 basis points. However, he finds reassurance in the fact that “this will be offset by the decline in oil prices.”

Additionally, with the Reserve Bank of India (RBI) infusing liquidity into the system, Mistry’s assessment of the numbers and their implications suggests a limited overall effect. “The decline in oil prices would contribute about 10 basis points, and the liquidity infusion would add another 10 basis points to the GDP,” he explained. As a result, he believes “the net impact on GDP will not exceed 25 to 30 basis points.”