US tariffs shake exporters, but India remains top investment destination, says Mark Mobius

Despite recent US tariff moves targeting Indian exports, India continues to attract global investors, according to veteran emerging markets fund manager Mark Mobius. Allocating nearly 20% of his portfolio to India, Mobius remains bullish on the country, citing robust domestic growth, entrepreneurial resilience, and ongoing government reforms as key drivers that keep India ahead of other emerging markets. In an interview with the Economic Times, Mobius believes Indian entrepreneurs are highly adaptive and creative and will find ways to mitigate the damage due to tariffs. 

The tariffs, announced by the Trump administration, primarily affect sectors like pharmaceuticals, gems and jewelry, and apparel. Mobius said:  “Many manufacturers are now exploring alternate production bases in Africa and other countries where US tariffs are lower. Indian exporters are creative and will find ways to mitigate the impact,” he noted.

Mobius emphasized that while exports will be affected, the domestic market in India is growing rapidly, helping cushion the overall economic impact. He estimates that India’s GDP growth may dip slightly—from an expected 6% to around 5.5%—but believes the long-term growth trajectory remains intact. “The tariff impact is unlikely to shave off more than 0.5% to 0.75% of economic growth,” he added, predicting eventual negotiations between India and the US.

Short-term risks

With the 21-day grace period for the tariffs nearing its end, Mobius outlined potential scenarios. Oil imports are a key negotiating point, as India continues to source Russian oil while China faces similar pressures. Falling Brent crude prices, currently around $65 per barrel, and a weaker rupee—which makes exports more competitive in dollar terms—could ease the immediate pressure on Indian exporters. Additionally, the Indian government has announced measures to support affected industries.

Mobius also highlighted India’s efforts to diversify its export markets beyond the US. Companies may shift production to alternate locations, such as Ethiopia and other African nations, to maintain access to the US market. “Yes, there will be pain, but it can be alleviated through these strategies,” he said.

India vs. other emerging markets

Despite short-term volatility, Mobius remains confident in India’s long-term investment appeal. While China has recently outperformed India in the equity markets, Mobius believes India’s higher growth rates and entrepreneurial strength make it an attractive destination for global investors. “You cannot beat India’s growth, and you cannot beat the entrepreneurs here. We are definitely not giving up on India,” he said.

He expects foreign investment flows to pick up in the next three to four months, once trade disputes are partially resolved. In addition, government reforms aimed at reducing bureaucracy and easing restrictions on domestic manufacturers are expected to enhance long-term efficiency and profitability. Mobius noted that these measures will be a significant financial relief for businesses.

Long-term confidence

Mobius reiterated that India remains his biggest investment bet, citing its strong fundamentals and long-term potential. “Short-term market movements don’t worry me. India is the place to be,” he said. His portfolio allocation reflects this conviction, underscoring his belief that India’s economic resilience, combined with proactive policymaking, will continue to attract foreign capital even amid temporary shocks.

In conclusion, while US tariffs pose short-term challenges for specific sectors, India’s domestic growth, government reforms, and adaptable exporters are expected to sustain investor confidence. According to Mobius, India’s long-term prospects remain strong, positioning it as a leading destination in the emerging markets universe.