As Donald Trump has taken over as the 47th President of the United States, businesses across the globe are keenly analyzing how his return to power will impact trade, investments, and market access. For India, especially its exporters and startups, the new policies under Trump could bring both opportunities and challenges.
In an exclusive conversation with Dr. Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), TICE explored how Trump's policies could shape India's trade landscape.
Trump 2.0: A Boon for Indian Exports?
Dr. Sahai believes Trump's return could be “extremely positive” for Indian exporters. The strong strategic ties between India and the US, particularly in defense, aerospace, and maritime security, create a favorable environment for trade growth.
“In 2023, our bilateral trade stood at $190 billion, with Indian exports at $120 billion. We aim to reach $500 billion under Trump’s regime,” he said. Given that most Indian exports do not directly compete with US manufacturers, sectors like pharmaceuticals, IT services, agriculture, apparel, and footwear could benefit. If Trump imposes high tariffs on competing countries, India may capture a larger share of the US market.
However, Sahai warns that negotiations will be crucial, as Trump has voiced concerns over India's tariffs and market access restrictions.
“The government is prepared with its own low-hanging fruits for discussions to ensure a win-win situation,” he added.
You can also watch this interview in Hindi here:
America First: A Challenge for Some Sectors
Trump’s aggressive “America First” policy aims to boost domestic manufacturing, which could pose challenges for Indian exporters in specific industries.
“The automobile sector is one to watch,” Sahai noted. Trump has expressed interest in reviving US automobile manufacturing, which may lead to higher tariffs on imports. “If that happens, India will need to assess its position and adjust strategies accordingly.”
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EV Industry: A Diverging Path
While India is pushing for electric vehicle (EV) adoption, Trump has not prioritized EV policies. This divergence could create both challenges and opportunities.
“India has committed to the Paris Climate Agreement and aims to cut emissions by 50% by 2030. Meanwhile, the US under Trump may continue favoring conventional automobiles,” Sahai said. This could benefit Indian automakers eyeing exports to traditional fuel-driven markets, including the US and Africa.
Impact on Indian Startups Expanding to the US
Many Indian startups, particularly in tech, aspire to expand to Silicon Valley. With platforms like Y Combinator facilitating early-stage funding, a pro-business Trump administration may offer both advantages and uncertainties.
“Trump recognizes Indian talent. His immigration policies may restrict low-skilled labor but are unlikely to impact high-value startups,” Sahai explained. The US venture capital ecosystem remains bullish on Indian startups, and investment inflows into India could rise. Given India’s position as the third-largest startup hub globally, startups focusing on technology and knowledge-driven sectors are expected to thrive.
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The Currency Factor: A Key Uncertainty
A major concern for exporters and businesses is currency fluctuation.
“Rupee depreciation makes investments in India more attractive, but it also creates uncertainty for manufacturers,” Sahai pointed out.
While short-term volatility may persist, the long-term outlook remains strong, with business shifting from other countries to India.
China Factor: Will India Gain?
Trump has consistently imposed high tariffs on Chinese goods, a trend likely to continue. This could benefit India, particularly in labor-intensive export sectors.
“Sectors like apparel, textiles, and footwear are expected to gain as US businesses shift sourcing away from China,” Sahai said.
Other sectors like toys and furniture may also see increased opportunities.
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Trump’s return to power presents a mixed bag for Indian businesses. While certain sectors like IT, pharmaceuticals, and textiles may benefit, industries such as automobiles need to stay cautious. Startups looking to expand in the US should continue focusing on innovation and high-value services. Meanwhile, India's growing startup ecosystem and strategic trade partnerships position it well to navigate the evolving global trade landscape.
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