In an exclusive conversation with ET Now, Sudip Bandyopadhyay shared his perspective on the dynamics shaping this rally and its broader implications.
“You are absolutely right. The rally we see today in US markets is basically sentiment driven and the sentiment is being guided by the statement made by Scott Bessent. US needs a deal with China. US cannot afford, US political establishment particularly the Republicans, cannot afford the soybean purchases by China being stopped. It is going to be a disaster in the heartland of US,” said Bandyopadhyay.
He emphasized that the United States’ dependence on Chinese supplies—especially rare earth materials vital for advanced manufacturing—makes a trade deal indispensable.
“They also need the rare earth from China, otherwise their manufacturing engine, particularly the upper end of the manufacturing, the high-end manufacturing, whether it is the EV, whether it is the chips, whether it is the high-end gadgets is going to stop. So, they need a deal. On the other hand, China also needs a deal. They cannot afford to stop exporting to the US nor can they afford not to get the high-end chips from US. So, it is an imperative for both sides to get a deal,” he added.
However, Bandyopadhyay urged caution, pointing out that so far, only the US side has been vocal.“We have not heard a single word from the Chinese side yet. The statements are all coming from US. So, I will wait and watch. I do not think I will get carried away by what the US administration is saying because we are used to now hearing all kinds of statements from US administration. Let us wait and watch. So, I will be very cautious.”When asked whether easing tensions could reduce the urgency for Washington to diversify away from China, potentially affecting India’s position as a ‘China-plus-one’ partner, Bandyopadhyay agreed but said India must rethink its competitive strategy.
“I agree with you. The fact is that if US and China agree to a trade deal… let us focus on the tariffs. Now, India is worried about the 50% tariff. 50% of our exports are becoming unviable to us and we need to do something about the tariff if we have to get back to our GDP growth which was originally envisaged before the 50% tariff was levied on us.”
He warned that if the US and China strike a favorable deal, India’s export competitiveness could be further challenged.
“If US and China have a great deal and the tariff for US-China also comes down significantly, now the entire Southeast Asia, all the competing countries whether it is Bangladesh, Vietnam, Malaysia, Indonesia, South Korea — everybody has a tariff for exports to US which is significantly lower than where India is. Now if China also goes there, we have a huge challenge in terms of our exports to US.”
Bandyopadhyay further noted that a “sweetheart deal” between the US and China could dilute India’s strategic importance, underscoring the need for a sharper, differentiated approach.
“As far as a deal with US is concerned, I am sure a sweetheart deal between US and China will weaken our hand. Whether we admit it or not, the fact remains that US needing India, the need of US for India in such a scenario will to an extent get reduced. So, we have to sharpen our value proposition and position ourselves differently.”
He also highlighted India’s limitations in opening up sensitive sectors and the need to identify alternative areas of strength.
“There are certain red lines as far as India is concerned. We cannot probably open the farm sector the way Thailand has opened or some other Asian countries are opening up for US farm products. We just cannot do it. It is not acceptable politically and economically. So, we have to figure out alternates… We do not have something like a rare earth which China used very effectively to arm twist US. So, we have to really work hard.”
Ending on a pragmatic note, Bandyopadhyay said India’s vast domestic market could still be leveraged as a strategic bargaining chip.
“Of course, our population of 140 crore — a huge market for consumption — is attractive to US corporates and we have to play to that sentiment and try and extract a deal.”
As both Washington and Beijing move closer to the negotiating table, market participants remain watchful. While optimism fuels the rally for now, the real test lies in the fine print of any potential deal — and how nations like India position themselves in the evolving trade order.