Shillong, Nov 6: The return of Donald Trump as the President of the United States of America (USA) has the potential to significantly impact the Indian economy, with both challenges and opportunities for growth.

Analysts are closely watching how his policies will shape the future of trade, investment and strategic partnerships between USA and India. While Trump’s approach often favours an “America First” agenda, his second term could strengthen ties between India and the U.S. in various sectors, offering promising economic prospects for India.

Potential Benefits for India

• Boost for Indian Exports: Trump’s re-election could provide a significant advantage for Indian export sectors. With the likelihood of higher tariffs on Chinese goods, Indian manufacturers in industries like auto parts, solar equipment, and chemicals could find their products more competitive in U.S. markets, creating new growth opportunities.
• Lower Energy Costs: Under Trump’s fossil fuel policies and expectations of slower Chinese economic growth, energy prices may decrease. This shift could benefit Indian oil companies like HPCL, BPCL, and IOC, as well as gas distribution firms such as IGL and MGL, by reducing operational costs.
• Growth in Manufacturing and Defense: Trump’s focus on industrial development in the U.S. could spill over into the Indian market. Companies operating in both countries, such as ABB, Siemens, Cummins, Honeywell, GE T&D, and Hitachi Energy, might see expansion opportunities. Additionally, Trump’s emphasis on strengthening U.S. military capabilities may create new opportunities for Indian defense firms like Bharat Dynamics and HAL.
• Improved Supply Chain Efficiency: A reduction in international tensions under Trump’s leadership could enhance global supply chain efficiency, benefiting Indian businesses. His push for revitalizing U.S. manufacturing could provide opportunities for India’s defense sector, and an improved manufacturing climate might further boost Indian exports.
• Business-Friendly Environment: Trump’s pro-business policies could improve the investment climate, potentially benefiting Indian equity markets. His tax cuts and fewer regulatory restrictions could encourage U.S. investments in India, driving economic growth.

Potential Disadvantages for India

• Inflationary Pressures: A Trump presidency might lead to inflationary pressures, with higher interest rates and rising costs for U.S.-sourced materials. Experts predict that his tariff policies, along with his stance on deportation and deficit spending, could drive up costs for Indian businesses, resulting in price hikes and wage adjustments.
• Stronger U.S. Dollar: Trump’s economic measures could strengthen the U.S. dollar, attracting global capital to the U.S. and increasing bond yields. This could weaken emerging market currencies, including the Indian rupee, raising India’s import costs, particularly for oil, and contributing to domestic inflation.
• Market Volatility: Although Trump’s policies may trigger initial market gains, his unpredictable policy decisions could lead to prolonged market instability. Historical trends show that U.S. markets outperformed Indian markets during Trump’s first term, with Nasdaq rising 77% compared to Nifty’s 38%, highlighting potential volatility for India.
• Impact on Indian IT Companies: Trump’s restrictions on H-1B visas during his first term led to increased rejection rates, negatively impacting Indian IT companies. While these companies have adjusted by hiring more locally and acquiring green cards, future immigration restrictions could create continued uncertainty and additional operational costs.
• Pressure on Trade Policies: Trump has frequently criticized India’s trade practices, calling for reciprocal tariffs and increased pressure to reduce trade barriers. Sectors like IT, pharmaceuticals, and textiles could face challenges as the U.S. pushes for changes. However, his push to reduce U.S. dependency on Chinese manufacturing could open doors for Indian industries to fill the gap.
• Global Inflation and Fiscal Deficit: Trump’s anticipated increase in the U.S. fiscal deficit could result in global inflation and higher interest rates, challenging monetary policies in emerging markets like India. While India’s domestic-focused economy offers some protection, a Harris victory could maintain current economic frameworks, creating less disruption for India.

Also Read: Spiritual leader Shrimat Shyamananda Brahmachari Ji passes away at 89

Also Watch

Find latest news from every corner of Northeast India at hubnetwork.in, your online source for breaking news, video coverage.

Also, Follow us on-

Twitter-twitter.com/nemediahub

Youtube channel- www.youtube.com/@NortheastMediaHub2020

Instagram- www.instagram.com/ne_media_hub

Download our app from playstore – Northeast Media Hub