Indian industries with exposure to the US market, including steel, textiles, commodities and Information Technology could see short-term disruptions as Donald Trump implements his political promise of putting “America First”.

However, these headwinds are likely to be more than offset by the medium-term benefit to India from supply chain relocation, as de-risking from China strategy gains further momentum under Trump 2.0.

Tariff battles

India and the US continue to engage in frequent trade skirmishes on tariffs and market access issues, with President Trump calling India a “tariff king”. Under Trump 1.0, India was part of the group of countries that fell foul to the US’ national security tariffs on steel and aluminium exports in 2018. But India is better prepared today, having taken many export-friendly decisions in the last few years, from ‘PLI’ to ‘Make In India’ and from tax holidays to the semiconductors programme. The new Trump administration may also look to take punitive steps against trading partners deemed to be artificially weakening their currencies. 

“These short-term disruptions are likely to be more than offset by the medium-term benefit to India from supply chain relocation, as de-risking from China strategy gains further momentum under Trump 2.0. Our analysis shows that India remains at the forefront of the global value chains shifting away from China, owing to its large domestic consumer market, reforms momentum and the policy focus on domestic manufacturing,” Nomura said in a report. 

Trade opprotunity

Sabyasachi Ray, Executive Director, Gem and Jewellery Export Promotion Council said Trump’s victory marks a new chapter in global trade dynamics, and GJEPC sees it as an opportunity to deepen the long-standing ties between India and the US. “We are optimistic that his campaign promise of a stabilized geopolitical landscape and a stronger US economy will help in solving the supply chain disruption,” he said. 

Siddhartha Rajagopal, ED, the Cotton Textiles Export Promotion Council said textile exports from India will remain stable and the US will continue to remain the largest market for textiles and clothing from India. “No major change is foreseen in textiles and exports will continue to grow. Market access issues may come up in other sectors but not in textiles,” he added.

Visa impact

India could be adversely affected by tighter immigration policies. Indian nationals received the highest number of work visas (H-1B visas) from the US, accounting for over 72 per cent of the visas issued in FY23. But experts believe Indian IT companies have advanced in-service delivery and hiring local talent thus reducing H1B visa dependence. 

Donald Trump’s comeback is seen as a positive for India’s agricultural trade. Exports of India’s agri and marine products like shrimp are set to gain in the days ahead.  US agricultural producers will be looking for opportunities to tap the growing demand for imported food and agricultural products in India.

Experts, however, cautioned that India may need to watch out for stiffer action on the tariff front as “reciprocal tariffs” against Indian goods have been one of Trump’s prominent election pitches.

Overall, there is a general bipartisan consensus in the US about deepening relations with India due to their own strategic global objectives, pointed out Anil Trigunayat, a former diplomat. “Given India’s economic and democratic and demographic heft and strategic autonomy in foreign and security policy, even though reluctantly acknowledged, is seen as useful in their geo-political and geo-economic considerations hence despite occasional blips and irritants US-India relations will move apace,” he said.

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