More US rate cuts, cheaper oil ahead? How Trump’s Venezuela stance could help India

The United States’ increasingly assertive stance on Venezuela and global geopolitics could eventually help stabilise oil prices and revive foreign investor interest in India, according to Rajeev Agrawal, Founder and Managing Partner, DoorDarshi India Fund.

Speaking to ET Now, Agrawal said recent comments by former US President Donald Trump signal a clear shift in how the US approaches neighbouring countries, particularly in Latin America. While increased US involvement in Venezuelan oil will not have an immediate impact, he expects production to rise gradually over time.

“Venezuela has the world’s largest oil reserves. As more oil eventually comes into the market, it should put downward pressure on oil prices, which is positive for the global economy,” Agrawal said, adding that lower oil prices would be supportive for growth across emerging markets.

US rate cuts could exceed expectations

Agrawal also expects the US Federal Reserve to cut interest rates more aggressively in 2026 than markets currently anticipate. “We had three rate cuts last year. With a new Fed governor being appointed this year, pressure to support growth will be high. I would not be surprised if rate cuts exceed three,” he said.

Lower US rates could improve liquidity conditions globally and drive capital flows back towards emerging markets, including India.

FPIs may rotate back to India

According to Agrawal, India could regain favour with foreign portfolio investors (FPIs) after underperforming other emerging markets in 2025. “About 91% of FPIs investing in India come from broader emerging market portfolios, not India-dedicated funds. Last year, money moved out of India into other emerging markets, but those markets have rallied sharply and valuations are no longer as attractive,” he noted.

With continued structural reforms and improving growth visibility, India may start looking relatively more attractive again, potentially leading to renewed inflows over the next few quarters.

India’s growth outlook remains strong

Agrawal remains optimistic about India’s medium-term growth prospects despite global uncertainties, tariffs and currency fluctuations. He pointed out that while nominal GDP growth has been somewhat subdued, real GDP growth remains robust.

“India is already clocking around 7.4% GDP growth. With ongoing reforms, I would not be surprised if India sustains 7% plus real GDP growth over the next few years,” he said. He added that the recent depreciation of the rupee, while hurting dollar-denominated GDP, could improve India’s competitiveness in global trade.

Earnings recovery expected with consumption and infra push

Corporate earnings growth, which has remained muted in recent years, is likely to improve as consumption strengthens and infrastructure spending gains momentum, Agrawal said. “As consumption picks up and more infrastructure gets built, earnings growth should start reflecting that improvement,” he added.

Venezuela oil plans hinge on government backing

On the feasibility of large-scale US investment in Venezuela’s oil sector, Agrawal said private companies would need strong backing from the US government. “Oil companies will require defence and operational guarantees from the US government. With the US Navy already active in the region, such assurances are possible,” he said, adding that upcoming meetings between US policymakers and oil executives could provide clarity on the plan’s execution.