Impact of Trump Presidency in India

On January 20th, 2017 defeating all the opposition, Donald Trump emerged as the 45th president of the U.S.A. Trump’s 15-point agenda which he had elucidated in the run-up to the elections could impact the Indian government, business sector and people in various ways.

  • Energy Plan

Trump has promised to unleash America’s shale oil, natural gas and coal reserves, in addition to opening onshore and offshore leasing on federal lands and lift the moratorium on coal leasing, to make U.S energy self-sufficient. This promise will open up the US oil sector leading to price stability globally. India could benefit massively as it will open large business opportunities for oil companies in India including state owned ONGC whose operations on foreign arm ONGC Videsh Limited (OVL) has been expanding globally.

  • Immigration

The withdrawal of H1B1 visas, which allows the U.S companies to outsource the work at a cheaper rate, will have a tremendous impact on Indian software industry as most of the IT companies in India send their staffs to on-site to work with their clients in U.S and earn about 60 percent of its $100 billion plus revenue. Indian outsourcing giants like TCS, Infosys and Wipro file over 1, 72,748 H1B and are heavy users of these visas. If the reforms in H1B system foresee minimum wages going up for the foreign workers, Indian IT companies will have to shell out higher wages.

  • Indian Economy

In order to fulfill his electoral promise, if Trump uses government money to lower the tax rates and increase military expenditure, it may cause a debt burden leading to a fall in the dollar value. The loss in dollar value may result in another recession that will adversely affect the investment and growth all across the nations including India. Whereas, Trump’s disdain for China that may result in the renegotiation of the trade deals might lead to a boosting in the Indian economy.

  • Reviving the American Economy

Trump plans to boost the GDP growth to 4% by lowering the corporate tax plan, cutting federal spending and easing regulatory frameworks, thus adding 25 million jobs over the next decade. This would enhance the role of private businesses and enhance opportunities for businesses to invest in the U.S. Under the EB-5 program, any entrepreneurs who can invest a minimum of $1 million to create at least 10 jobs for American workers are eligible for a green card. This will allow more opportunities for Indians to invest in the U.S and get that much coveted and aspirational green card.

  • Scrapping Obamacare

Trump’s scrapping of the Obama care scheme may affect the Indian pharmaceutical sector. By manufacturing affordable generic drugs, the pharmaceutical industry alone gained massively and constituted as the second biggest exports of India to the U.S. According to US Census Bureau data, Indian pharma exports have almost doubled from $31 billion to $66 billion in a span of five years since 2010, after the implementation of Obama care. If Trump scraps Obamacare, Indian drug companies as well as the Indian IT companies which provide support to the program could also end up losing their business that could lead to huge job cuts in India.

  • Tax Plan

If the republican candidate fulfills his promise made during his campaign to reduce corporate tax from 35% to 15%, it would attract the world business to the American soil, especially those businesses that have set shop in other nations in order to pay lesser taxes. If this plan gets executed, U.S businesses in India could be lured back to the U.S and many industries including the automobile sector in India could well be tempted to move a part of its revenue earning processes back to the USA. That would affect a large crowd of Indian employees.

  • Terrorism

Trump’s dislike and distrust for Pakistan may work well in India’s favor, as the Modi government also is moving forward to isolate Pakistan globally, following the Uri terror attack. Trump’s strong words to curtail ISIS and curb immigration from countries that export terror, would comfort India, which has seen a surge in support for ISIS among its youth. But at the same time, in order to resupply troops inexpensively, US need Pakistan’s support in stabilizing Afghanistan. If the Trump administration decides to cut costs and leave the Afghans to their own devices, Taliban will get stronger, leading to a weakening in India’s position, thereby ending up losing any and all leverage it has in Central Asia.

  • Trade

Trump has tagged China as a currency manipulator and has called for imposing higher tariffs on Chinese goods, initiating litigation and bringing trade cases against China at the WTO to force it to cut short its trade subsidies. Trump’s promise to curtail China could open possibilities for India by improving trade in areas of computer hardware, telecommunication equipment, gems and diamonds followed by pharmaceuticals.

-Elizabeth Jacob

  (Symbiosis Institute of Telecom Management)

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s