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How Trump 2.0 will impact India’s roadmap to ‘Viksit Bharat’

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How Trump 2.0 will impact India's roadmap to 'Viksit Bharat'

Donald Trump’s return to the White House may bring notable shifts in India-US relations across several sectors, with impacts on trade, defence, and immigration.

Analysts suggest that Trump’s stance on China could indirectly benefit India. Adrian Mowat, an investor, expects new tariffs on China under Trump, which could encourage companies to relocate manufacturing from China to India. However, Trump may also impose tariffs on US firms with substantial IT operations in India, affecting India’s tech sector.

Impact on Workforce 

In immigration, Trump’s stricter policies could again pose challenges. His previous term saw restrictive H-1B visa policies, which impacted Indian IT professionals and led to higher visa denial rates. JM Financial reports that H-1B visa approvals for major Indian firms like Infosys, TCS, and Wipro dropped by 50-80% between FY15 and FY24 due to these measures. Reintroduced restrictions could further influence India’s tech talent pipeline to the US.

Financially, markets seem optimistic, with Dow Futures rising 850 points on election news. However, experts like Ed Yardeni of Yardeni Research caution that a Trump victory may strengthen the dollar, pressuring emerging market currencies, including the rupee. Arvind Sanger, Managing Partner at Geosphere Capital, also anticipates higher US bond yields, which may impact the Federal Reserve’s interest rate plans.

Impact on Trade Ties 

In trade policy, Trump’s “America First” approach aims to prioritize US interests, often reshaping traditional alliances. His past exit from agreements like the Paris Climate Accords signalled a shift, which could bring similar changes in a second term and affect trade relations with India.

Defence cooperation may hold steady

Under Biden, agreements like the Initiative on Critical and Emerging Technology (iCET) and the GE-HAL jet engine deal strengthened ties. Trump’s approach to alliances may be cautious, yet India-US defence collaboration could deepen as both countries share interests in countering China’s Indo-Pacific influence. The Quad alliance, comprising the US, India, Japan, and Australia, may also see continued defence cooperation, with expanded arms sales and joint military activities.