2025 Outlook: Mark Mobius Expects Funds Flow To Continue In India; Bullish On Defence, Infra, Semiconductors

Renowned fund manager, Mark Mobius is bullish on India for 2025. Mobius believes funds will continue to flow next year in emerging markets and India. He believes India stands to benefit from Trump's tariff and policies as American companies would look to park their money somewhere and India including Emerging Markets is an attractive hub. Despite the latest growth rate of 5.4% of India's GDP, Mobius sees the performance as good given the global average. That being said, he is bullish on sectors like defence, infrastructure and semiconductors.

Mobius in an investor webinar with Prabhudas Lilladher spoke about the global market and economy including India. He shed light on opportunities, challenges and risks for the markets in 2025.

Here are some key highlights by Prabhudas Lilladher of Mark Mobius's stance in India and the global market:

Trump Tariffs:

Although Trump has talked about imposing trade tariffs, Mobius believes that the US President might not implement them once he assumes office in January. Instead, he could use tariffs as a bargaining chip to negotiate open trade deals. This approach could lead to improved trade relations between the US and various countries.

On the trade war with China, Mobius said, "In anticipation of potential restrictions and tariffs, Chinese companies have already started expanding their manufacturing base, setting up factories in countries like Vietnam, Indonesia, and Thailand. This stands to benefit emerging markets."

Fund Flows In 2025:

Assuming Trump's efforts to improve government efficiency and reduce bureaucracy, Mobius said, American companies stand to gain significant wealth. This increased wealth will need to be invested somewhere.

Adding he said, "Emerging Markets like India stand to benefit as there is a limit to which investors would want to put their money in the US market. Plus, the opportunities in emerging markets are also thriving."

If China and the US manage to reach a trade agreement, then inflows to China could be greater but India will continue to lead in terms of growth, he said.

Indian Economy Outlook For 2025:

On the GDP growth rate of 5.4% in Q2FY25, Mobius highlighted that though a sub-6% growth rate is lower than most estimates, we need to understand that the Indian economy grew despite having a size as big as $4 trillion. On a macro front, a 6-7% growth rate in India is a good rate given the global average.

He said, "Make in India and the impetus government provides to manufacture locally, is a big positive and the biggest advantage of local manufacturing in India is that they have a big market for local/self-consumption," adding, "India's ability to manage inflation without compromising growth will be pivotal in attracting sustained foreign investments."

Mobius is positive on these sectors:

Defense Manufacturing: India's emphasis on self-reliance, strategic technology transfers and export-oriented policies, is creating a defence manufacturing ecosystem with global relevance.

Semiconductors: India's leap into semiconductor manufacturing, leveraging its existing software dominance, marks a pivotal transition toward advanced manufacturing. This industry is expected to attract substantial global investments and drive India's export competitiveness.

Infrastructure and Urbanization: Expanding airports, ports, and railways remains a cornerstone of India's growth strategy. Rising urbanization continues to drive demand for transportation, housing, and consumer goods.

Tourism and Travel Growth: Rising income levels and experiential preferences of India's younger generation are driving domestic tourism growth. The large number of Indian tourists at key tourist destinations signals an increased domestic travel and the need for corresponding infra investments.

Energy and Commodities: India's energy demand is expected to grow exponentially, with fossil fuels still playing a critical role despite the global push for renewables. Commodities such as gold, coal, and steel will remain in high demand, driven by inflationary pressures and infrastructure expansion.

Digital Public Infrastructure: Initiatives like UPI and Aadhaar place India as a global leader in scalable, low-cost digital solutions, driving financial inclusion and efficiency. These innovations also serve as a blueprint for other emerging markets.

Amisha Vora, Chairperson and Managing Director, PL Capital Group - Prabhudas Lilladher said, "We are witnessing financialisation of assets in India, it will lead to domestic/retail capital entering the markets. While the secular bull-run will continue, retail investors should look at investing regularly with discipline to take benefit of this wealth creating opportunity."

On governance, Mobius said, the Indian government has done a phenomenal work by creating solid infrastructure to support growth, highlighted Mobius. Despite political challenges, Modi's administration remains focused on reducing inefficiencies, modernizing infrastructure, and enhancing governance. The central challenge lies in balancing populist measures with long-term structural reforms. Increased access to information has democratized governance globally, making transparency and accountability non-negotiable. This shift forces governments to act decisively, amplifying the economic impact of elections and policy decisions.

Macro Outlook For 2025:

Mobius is cautiously optimistic outlook for global and Indian economic trends, driven by both cyclical and structural factors. Tapering off Russia-Ukraine conflict and reduced Middle East turmoil, are expected to bolster global growth.