The U.S. election results have once again turned the world’s attention toward Donald Trump as he secures a second term, defeating Democrat Kamala Harris in a closely watched race. His renewed presidency, underpinned by his “America First” policy, holds critical implications for India, particularly in areas of trade, H-1B visa policies, and the U.S.-India strategic alliance.
Trade: A Balancing Act for India
Trump’s trade policy focuses heavily on promoting American industries and reducing trade deficits, which could mean a tougher stance on India’s trade surplus with the U.S. During his first term, Trump often targeted countries with favourable trade balances, including India, leading to tariff hikes and stricter import measures. A second Trump term may see India pressured to lower its trade barriers further to maintain access to the lucrative U.S. market. Indian industries like IT, textiles, and pharmaceuticals, which rely significantly on U.S. exports, could face heightened tariffs unless reciprocal concessions are granted.
However, there is a potential silver lining. Trump’s push to shift supply chains away from China might benefit India. American companies looking to diversify may increasingly turn to India as an alternative manufacturing base, creating new commercial opportunities. Analysts from Nomura suggest that while Trump’s strict trade policies could pose initial challenges, India may ultimately benefit from the “China Plus One” strategy.
H-1B Visa Policy: Opportunities and Setbacks
Trump’s previous tenure saw tighter H-1B visa regulations, a trend likely to continue as he aims to prioritise American jobs. His administration had previously implemented stricter eligibility criteria and increased scrutiny of visa applications, limiting opportunities for foreign workers, particularly in the tech sector, which employs a large number of Indian professionals.
With his return, policies like wage hikes for H-1B holders and reduced visa numbers could impact Indian IT firms and professionals. However, Trump’s focus on high-skilled immigration might allow qualified Indian candidates in advanced fields to remain competitive. The Indian government will likely need to continue advocating for more favourable H-1B terms to mitigate potential roadblocks for its skilled workforce.
The Impact of ‘Trumpflation’ on Indian Equities
Financial experts anticipate that a Trump presidency could affect global stock markets, with emerging markets like India experiencing fluctuations due to Trump’s anticipated anti-globalization stance. Trump’s policy of higher U.S. interest rates to attract investments domestically could drive the dollar higher, leading to depreciation in the rupee and increased costs for Indian companies reliant on imports.
The rise in the U.S. dollar could also influence Indian exports negatively, making them less competitive. Conversely, this may favour Indian industries dependent on dollar revenues, such as IT services. Additionally, lower crude oil prices—a likely scenario under Trump’s policies—could provide a much-needed boost to India’s economy, reducing the import bill and positively impacting the trade deficit.
Security and Strategic Relations: Reinforcing the Quad
India’s defence and security cooperation with the U.S. could see continuity or even strengthening under Trump. Known for his tough stance on China, Trump is likely to continue pressing Beijing on issues such as trade imbalances, intellectual property theft, and territorial expansion in the South China Sea. This aligns well with India’s interests in maintaining a stable and free Indo-Pacific region, particularly given its own tensions with China.
Trump’s commitment to the Quad alliance—comprising the U.S., India, Japan, and Australia—could serve as a strategic bulwark against China’s regional dominance. The Quad, revived under Trump in 2017, underscores the importance of U.S.-India defence cooperation, with both countries seeking a mutually beneficial alliance. A stronger Quad could provide India with a more substantial platform for addressing its security concerns and expanding its influence in the Indo-Pacific.
Isolationism: A Potential Drawback for India’s Global Aspirations
Despite these potential benefits, Trump’s isolationist approach remains a concern for India. His withdrawal from international organisations and alliances, including the Paris Climate Accord, demonstrated a reluctance to uphold a multilateral global order. For India, a strong supporter of multilateralism, Trump’s stance could complicate its aspirations of playing a more significant role on the global stage.
Additionally, Trump’s isolationism may reduce America’s involvement in issues critical to India, such as counterterrorism efforts in South Asia. While India values its independence, it has long relied on U.S. support to counterbalance regional threats and curb terrorism, particularly in areas like Kashmir. A more inward-focused America could potentially reduce this support, leaving India to navigate these challenges more independently.
With deft diplomacy and a strategic approach, India has the potential to turn Trump’s policies to its advantage, especially by leveraging shifts in the global supply chain and reinforcing ties with the Quad. As India looks ahead, it must remain adaptable, ensuring that its economic and strategic interests are safeguarded amid the evolving U.S. policies under Trump’s renewed presidency.
