US-China trade war might not affect India directly, says McKinsey global head Kevin Sneader

As per him, Indian economy registering a growth rate of 7.5 per cent is always encouraging.

The trade war between US and China will will not affect India directly, however the country may see spike in commodity prices, said Kevin Sneader, global CEO of McKinsey in an interview with ET. 
 
"It will be the second-order effects that will impact India and other countries, not the tariffs. And probably the biggest irony of all of this, I suspect, is that China will be the least impacted because it will diversify sources of import and find new markets." 
 
The US exports to China are about $125 billion while imports from China amounted to $500 billion. 
 
"If we go by the first round of tariffs announced in mid-June, then business worth $100 billion out of a $635 billion trade relation was affected and that wasn’t much. That wasn’t a trade war but the real issue is the escalation after the June 18 announcement of tariffs on $200 billion of China’s exports and that changes the game. That would mean tariffs on nearly half of China’s exports to the US and that’s a big issue," explained. 
 
At the moment, as he says, "we aren’t in one but we definitely are on the brink of a trade war".
 
India happens to be his first foreign trip after his appointment as CEO. He was the firm’s Asia chairman before being elected to the top job.
 
“I wanted to be in Asia and I wanted to be somewhere that matters to the world in terms of size and importance. I have been coming to India regularly. This opportunity was find out what’s happening in India.” Sneader was quoted as saying.
 
As per him, Indian economy registering a growth rate of 7.5 per cent is always encouraging.
 
“Global CEOs I speak to feel that GST and demonetisation might have created minor short-term hiccups but overall there is a general sense of optimism. Investors are looking at opportunities in India that weren’t there a few years ago.”
 
Asked if global investors want to wait till next Lok Sabha elections or the investment will continue regardless, Sneader said, "CEOs aren’t looking at India from that lens anymore. The $16-billion Walmart-Flipkart deal happened recently. Global investors now look at India on fundamentals, economic prospects, demographics and its place in the world. They understand that Indian politics are what they are." 
 
Source: ET

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