Donald Trump’s presidency has always captured global attention, and his return to the White House is no exception. On January 20, 2025, Donald Trump is set to be inaugurated as the 47th president of the United States, amidst global speculation about his policies and their implications. Invitations to attend were extended to nations like China, while India’s representation was confirmed with External Affairs Minister S. Jaishankar in attendance.
For India, Trump’s leadership comes with a mix of opportunities and challenges. His policies on trade, immigration, and global alliances could shape India’s economy and strategic positioning in profound ways. Corp India News breaks down the key implications of Trump’s inauguration for India and the broader world.
Trump’s First Term: Shaping Indo-US Relations
During his first presidency (2017–2021), Donald Trump reshaped the US’s global stance, and India was no exception. His tenure marked significant milestones in bilateral relations, but not without its share of challenges.
Strengthening the Partnership
Trump and Indian Prime Minister Narendra Modi shared a unique camaraderie, epitomized by events like “Howdy, Modi!” in Houston and “Namaste Trump!” in Ahmedabad. These public displays of unity underscored a strong partnership:
- Defense Collaboration: The US and India signed key agreements like the COMCASA (Communications Compatibility and Security Agreement), enabling enhanced defense cooperation. India also procured advanced military equipment, including Apache and Chinook helicopters. The total defense trade increased to over $20 billion during Trump’s first term.
- Strategic Cooperation: Trump’s tough stance on Pakistan and his support for India during the Pulwama-Balakot crisis strengthened India’s security position. His labeling of Pakistan as a “safe haven for terrorists” aligned with India’s regional concerns.
Challenges in Trade and Immigration
- H-1B Visa Restrictions: Trump’s tightening of visa norms impacted thousands of Indian IT professionals. Companies like Infosys and TCS faced higher operational costs as they were forced to hire local talent in the US. The Indian IT sector, contributing $150 billion annually to the economy, saw disruptions in talent mobility.
- Withdrawal of GSP Benefits: The US removed India’s preferential trade status under the Generalized System of Preferences (GSP), affecting $6.3 billion worth of Indian exports. Key sectors like textiles and agricultural products faced tariff hikes, reducing competitiveness.
India-US Trade: Expanding Economic Ties and Investments
In recent years, the economic relationship between India and the United States has grown significantly, with both countries enhancing their collaboration across various sectors. According to a 2024 report by the Confederation of Indian Industry (CII), more than 160 Indian companies have established a presence across all 50 US states, contributing over USD 40 billion in direct investments.
These Indian businesses have played a key role in creating or preserving over 425,000 jobs in the US. Additionally, they have invested close to USD 1 billion in research and development (R&D) and USD 195 million in corporate social responsibility (CSR) initiatives.
States Benefiting from Indian Investments
- Job Creation: The largest beneficiaries of employment from Indian companies include Texas, New York, New Jersey, Washington, Florida, and California.
- Foreign Direct Investment (FDI): The highest levels of FDI from Indian firms are concentrated in Texas, Georgia, New Jersey, New York, and Massachusetts.
In 2023, India’s exports to the US reached USD 40.33 billion, representing 19% of India’s total exports. The largest export categories include smartphones and medicines, underscoring the growing role of technology and healthcare in this bilateral trade. On the import side, India’s purchases from the US, particularly petroleum crude, saw an increase of 2.28% in FY25, highlighting the continued importance of US energy supplies to India.
Trump’s Second Term: Key Policies and India’s Stakes
Trump’s manifesto for his second term has far-reaching implications for India. Here’s what’s at stake:
Trade Protectionism
Trump’s “America First” approach could lead to higher tariffs on Indian goods, impacting key sectors:
- Textiles and Apparel: India’s exports in this sector totaled $750 million annually to the US. Higher tariffs could erode margins for Indian exporters.
- Pharmaceuticals: India, a global leader in generic drug production, exported $7.44 billion worth of medical appliances and pharmaceuticals to the US. Increased duties could disrupt market access and revenue streams.
Retaliatory trade measures might further complicate global supply chains, putting additional pressure on India’s export-driven economy, which grew by 27% in services as of 2023.
H-1B Visa Controversy: A Divisive Issue
As Trump enters his second term, the H-1B visa programme has become a contentious issue within his support base, split between the DOGE and MAGA factions. The H-1B system, which has allowed skilled workers—many from India—to contribute significantly to sectors like technology, has come under scrutiny. While Trump has previously criticized the programme, claiming it exploits American labor, he now seems to align with the DOGE camp, led by tech figures like Elon Musk and Vivek Ramaswamy, who advocate for “major reform” rather than its abolition.
This shift is notable, given Trump’s history of employing H-1B visa holders in his businesses. However, he continues to face strong opposition from MAGA supporters who argue that the programme undermines American workers and encourages illegal immigration. This internal rift may influence Trump’s policies on immigration, labor, and technology sectors—issues that hold major implications for India.
Rebalancing Global Trade
Trump’s tough stance on China aligns with India’s strategic goals:
- Supply Chain Diversification: As US-China tensions grow, global companies may look to India as a viable manufacturing hub. India is already the seventh-largest exporter of commercial services, with a 4.6% share of global trade in services.
- Strategic Alliances: Enhanced cooperation through platforms like the Quad (India, US, Japan, and Australia) could counterbalance Chinese dominance in the Indo-Pacific region.
However, Trump’s rhetoric against BRICS nations, particularly in light of their efforts to challenge the US dollar with an alternative currency, could complicate India’s global ambitions. While his “America First” policy seeks to safeguard US economic interests, it could undermine India’s growing influence on the global economic stage. In a Truth Social post, Trump stated: “We require a commitment from these countries that they will neither create a new BRICS currency, nor back any other currency to replace the mighty U.S. Dollar, or they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy.”
Global Context: Key Shifts Under Trump
Russia-Ukraine Conflict
Under Biden, the US maintained a strong stance against Russia’s aggression in Ukraine. Trump’s approach is likely to differ:
- Reduced US Involvement: Trump’s preference for limiting foreign entanglements might weaken NATO’s response to Russia. This could alter the dynamics of the conflict, potentially prolonging it.
- Implications for India: A more neutral US stance could allow India to maintain its balanced position while expanding energy and defense ties with Russia. India has already ramped up oil imports from Russia, taking advantage of discounted rates.
Middle East Diplomacy
Trump’s policies, including the Abraham Accords, reshaped the Middle East’s geopolitical landscape:
- India-Israel Collaboration: Enhanced US-Israel ties under Trump could boost India’s defense and technology partnerships with Israel. This includes joint missile defense systems and AI collaborations.
- Energy Security: Trump’s influence on Gulf oil policies might impact India’s energy imports, particularly from Saudi Arabia and the UAE, which supply over 50% of India’s crude oil.
US-Europe Relations
Trump’s preference for bilateral agreements over multilateral frameworks could strain US-EU relations. This may create opportunities for India to:
- Strengthen Ties with Europe: Expand trade and technology collaborations, especially in sectors like green energy and AI.
- Position as a Neutral Partner: Mediate between divergent US and EU interests, leveraging its growing global clout.
Economic and Trade Impacts on India
Market Volatility
Trump’s expansionary policies could lead to higher US inflation and interest rates:
- Capital Outflows: A stronger US dollar might trigger capital flight from emerging markets like India, affecting foreign exchange reserves.
- Stock Market Impact: Export-driven industries, including IT and textiles, could experience heightened volatility.
Opportunities in Defense and Energy
- Defense Procurement: Trump’s emphasis on military modernization aligns with India’s defense needs, opening doors for advanced technology and equipment purchases. Bilateral defense trade could exceed the $20 billion mark.
- Energy Imports: Increased US crude oil exports could help India diversify its energy sources and reduce reliance on Middle Eastern supplies, ensuring long-term energy security.
Strategic Opportunities for India
Despite challenges, Trump’s presidency offers several avenues for India to strengthen its global position:
1.Bilateral Engagement:
- India’s proactive diplomacy can address trade and immigration concerns while fostering mutual growth.
- Trade Minister Piyush Goyal has emphasized deepening economic ties with the US to reduce imbalances and enhance cooperation.
2.Geopolitical Alliances:
- Shared concerns over China’s regional ambitions provide a strong foundation for US-India collaboration.
- Despite Trump’s dismissive stance on multilateralism during his first term, platforms like the Quad (comprising India, the US, Japan, and Australia) shall continue to play a crucial role in counterbalancing China’s growing influence in the Indo-Pacific region.
Conclusion: Navigating a Complex Landscape
Trump’s return to the presidency marks a pivotal moment in global politics. For India, this presents a mix of challenges and opportunities that require strategic foresight and proactive engagement. With a robust trade relationship and shared strategic goals, India and the US have much to gain from mutual cooperation. As the world’s largest democracy, India has the potential to navigate these complexities and emerge stronger on the global stage.
Corp India News will continue to provide in-depth analysis and updates on these developments, ensuring you stay informed about how global changes impact India.