“One big structural issue for India has been that it has one of the lowest intraregional trade rates in the world,” Sharma said.
India trades relatively little with neighbours
Sharma said India “barely trades with its neighbors” and pointed to relations with neighbouring countries as an important factor behind the low level of regional trade.
For Sharma, this matters because successful large economies have often benefited from being part of regions where countries trade extensively with one another.
“Normally if you look at the big successful economies, they tend to reside in geographies where they trade a lot with each other,” he said, according to Bloomberg News.
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He cited East Asia as an example of a region where strong economic links and substantial trade between countries have played an important role. In his assessment of India under his 10-rule framework, geography therefore receives a relatively low ranking.
The geography measure is one of 10 factors Sharma uses to assess emerging and frontier markets over a three- to five-year investment horizon. His framework also considers demographics, politics, state intervention, debt, investment, inflation, billionaire wealth, currency and investor sentiment.
Regional integration matters for growth
Greater regional trade can allow economies to build deeper supply chains, expand export markets and benefit from closer economic integration. Sharma’s comparison with East Asia highlights the potential disadvantage for countries that remain relatively disconnected from their immediate neighbours.
For India, the issue is not simply the size of its domestic market. A large domestic economy can provide substantial opportunities for businesses, but limited regional trade can reduce access to neighbouring markets and the wider benefits of regional economic integration.
Sharma’s assessment comes as India continues to seek stronger integration with global supply chains and expand its manufacturing and export base. However, his comments focus specifically on trade within India’s immediate region rather than its overall global trade.
India gets a mixed assessment
The weak geography score is part of a broader mixed assessment of India. Sharma said demographics remain a relative strength, while inflation performance is also comparatively favourable.
He gave India a relatively decent assessment on debt, although he flagged rising debt and deficits at the state level. Government investment, particularly in infrastructure, has been strong, but private investment remains weaker, he said.
At the same time, Sharma raised concerns about regulatory intervention and elevated equity valuations, particularly in the mid- and small-cap segments.
His broader conclusion was that India does not fit neatly into a uniformly positive or negative economic narrative. Instead, strengths such as demographics and macroeconomic stability coexist with structural challenges, including limited intraregional trade.
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