JP Morgan CEO has a word of advice for India

NEW DELHI: The time is ripe for India to grab a chunk of global trade and strengthen its manufacturing industry as the US and China trade war intensifies, threatening the three-decade-old global economic order, but investments would be conditional on accompanying reforms, said Jamie Dimon, CEO of JP Morgan.
India has slowed in the past few quarters but it is still among the fastest growing economies and it can get back to 7-8% economic growth if it continues to ‘attack’ the potential bottlenecks such as availability of real estate, infrastructure and labour laws, he said.

World trade relationships may never be the same again even though the US and China have signalled a truce with a recent agreement, dubbed as a mini trade deal. But there may never be sustainable trade pact, or a phase 2, leading to a ‘gentle decoupling’ between the US and China, he said.


“In any way it could be a plus for India,” Dimon told ET in an interview. “There is a reason why people (would want to) come here… you have proper treatment of capital, bankruptcy laws, labour laws, real estate so that you can actually build and do things here you might have otherwise done in China. I would hope your government is thinking about this very carefully and has plans that particularly attack that.”

Dimon Bullish on India
Dimon has been among the high profile global CEOs who has been bullish on India as the Narendra Modi government pushes digitisation, promotes manufacturing with higher foreign investments and cuts red tape. With an eye on attracting new investments in manufacturing to promote jobs, the government recently cut tax rates to 15% for new investments in manufacturing, competing directly with the lowest tax rate in the continent prevailing in Singapore.

“It will be a huge benefit,” Dimon said on the government measures. “Businesses are going to look at things like taxation, labour force, the ability to buy real estate, better infrastructure, the regulatory environment, the ease of doing business … they are going to look at all these things. They could also look at allowing higher foreign direct investments in some sectors. India has a lot going for it, but just like other countries it has a lot to do.”

On the global trade front, Dimon also said that the dispute is not just between the Trump administration and the Chinese government. Instead tensions have been building up over a period of time with businesses complaining about adverse treatment while dealing with China.

“Trade is a major issue and there are legitimate complaints. And those complaints are just not American, they are European, Japanese and they need to be fixed and they are going to be fixed. We will get the phase 1 mini-deal, which is real, it could open up some of the industries, some intellectual property, some tariffs not going up. But I don’t know if there will be a phase 2. There may never be a phase 2. And if there is never a phase 2 you will see a gentle decoupling. It’s not a violent thing, it’s just that if they feel someone is unfair they will do things to counter it unilaterally, which they have a right to do. India could do it, China could do it, the United States could do it. That is not a cold war. This is an economic realignment.’’ The JP Morgan CEO, who is spearheading a campaign for corporates to take into account the impact of their business on local communities and society through the Business Roundtable, said the recent US-China agreement on trade was more a ‘truce’ rather than a springboard for another round of global growth.

“The trade relationship will be diminished overtime, people will agree to do certain things and not other things, but life will go on, the world will be ok, the world will grow,” said Dimon. “This is not a world war.”

Dimon, who has been skeptical of digital currencies for years, believes that Facebook’s effort to conquer the currency space with Libra is doomed to fail.

“You guys spend a lot of time on these things,” said Dimon. “It’s not going to happen. At the end of the day, it is not the blockchain that works, it’s the cryptocurrency. Who controls an asset-backed cryptocurrency? Governments will eventually want to have a certain amount of control; they are not going to allow these things to be outside the banking system.’’