Everyone was thinking that the next President of The United States of America would be Hillary Clinton but the results proved otherwise. Donald Trump was elected as the 45th President of the US. Shortly after Trump’s stunning victory, Prime Minister Narendra Modi congratulated the Republican leader for his spectacular win. Appreciating the “friendship” articulated by Trump towards India during his election campaigns, PM Modi said that the government looks forward to working with him closely “to take India-US bilateral ties to a new height”. Trump elucidated on his 15-point agenda in the run-up to the elections. If he decides to implement them, it could impact the Indian government, people and businesses in several ways. Here is a lowdown on the implications Trump’s policies as the US President could have for India:
1) Immigration issue: According to Madan Sabnavis of CARE ratings, the immigration issue is likely to militate against us. ” While he has not specifically targeted Indians and his angst has been directed at Mexicans, the issue of job creation is paramount in his mind. Also, his stand against moving jobs outside the US are well-known. While Fed policy is data dependent on employment numbers, quite clearly, the IT sector has a reason to be worried,” he wrote in an opinion piece for FirstPost. This does not augur well for India since a large part of the IT industry is dependent on what happens in the policies on immigration in the US.
2) Free trade, Outsourcing: “I know the outer world exists… But at what point do you say, ‘Hey, we have to take care of ourselves,” The Washington Post had quoted Trump as saying.
This implies serious ramifications on free trade, immigration, outsourcing etc. Just a few days ago, Trump claimed that the Americans are living through the “greatest jobs theft” in the history of the world, saying US companies were moving out jobs to countries like India, China, Mexico and Singapore. Given that Trump has several times placed India in the same category as China, an economic competitor, India-US economic ties could be an area to watch out for, for increased stress points.
3) The Tax Plan: One of the highlights of Trump’s economic campaign is his plan to reduce corporate tax rates in the U.S to 15%. At present the rate stands at 35%. This would make the US one of the most attractive destinations in the world for businesses, especially for American businesses that have set shop in other countries to improve their profitability by paying less taxes. If Trump were to implement this plan, US businesses in India could be lured back to American soil upsetting Modi’s flagship ‘Make in India’.
1) Investment flows: A Trump victory would be good for investment flows as he has indicated that he wants interest rates to remain low. Hence, the expected rate hike of the Federal Reserve would be pushed forward for some more time. The positive impact would be that the funds which would have otherwise flowed back to the US in case interest rates were raised will continue to flow to the other countries.
2) For Pakistan, Modi could find his biggest ally in Trump: When it comes to dealing with India’s ‘bad-neighbour- Pakistan, the Modi government would likely find one of its biggest allies in Trump. Trump, during his campaigning days, had talked about terrorism and Pakistan in particular on various occasions. “When will Pakistan apologize to us for providing safe sanctuary to Osama Bin Laden for 6 years?! Some ally,” he once tweeted. In September, on an American radio show, Trump had called Pakistan “probably the most dangerous” country in the world today, adding that the only country that can “check” Pakistan is India. In wake of recent terror attacks and India’s hard stance against Pakistan, Trump’s views on the country might be welcome by the Modi government.
Trump’s opinion on India has largely been positive. He recently attended an event organised by a Hindu group in the US, and proclaimed his love for India, saying, “I love Hindus”. How that might go with the non-Hindu Indians is hard to say.