India and the U.S. have shared a strengthening partnership over the years, bolstered by shared democratic values and strategic goals. However, this relationship has experienced opportunities and challenges, both under Trump’s administration.
The presidency of Donald J. Trump, marked by unconventional policies and a distinctly “America First” approach, sparked significant shifts in global geopolitics, trade relationships, and international diplomacy. Among the many nations impacted by Trump’s policies, India emerged as a noteworthy player, experiencing challenges and opportunities under his tenure.
This article will explore the multifaceted impact of Trump’s presidency on India and Indian businesses, including bilateral trade and commerce. It also delves into why sections of the Indian populace and businesses might view Trump’s presidency positively.
India and Trump: A Symbiotic Relationship
As a leader, Donald Trump often emphasized the importance of fostering bilateral relationships that serve mutual interests. While his presidency raised concerns in many quarters, his approach toward India reflected a pragmatic alignment of strategic, economic, and political interests.
Strengthening Bilateral Trade Ties
Trump’s presidency saw a renewed focus on the Indo-U.S. trade relationship, albeit with occasional friction.
Let’s dig into the background. During the financial year 2023-24, U.S.-India bilateral trade, or the size of the trade between both nations, stood at nearly $128.78 billion, with the trade balance leaning in favour of India, with a surplus of $35.3 billion.
The US has been India’s largest trading partner for two years, in a row. The two countries have a strategic partnership, that prioritises:
- Technological advancement
- Innovation and R&D
- Resilient supply chains
- Inclusive & sustainable growth
The US is India’s third largest investor, with cumulative FDI inflows of $62.24 billion from April 2000 to September 2023.
Trump’s administration emphasised fair trade practices and sought to address the U.S. trade deficit with India, which stood at approximately $24 billion during his presidency, the previous term. While negotiations were often tough, they pushed India to address long-standing trade barriers, such as high tariffs on U.S. goods. For instance:
Pharmaceuticals: Indian pharmaceutical exports to the U.S. benefited from consistent demand, with the U.S. importing nearly $6 billion worth of generics from India annually.
Agriculture: India relaxed some trade barriers, opening its market to American agricultural exports like almonds and apples.
Energy: The Trump administration promoted energy exports to India, making the U.S. a key supplier of crude oil and liquefied natural gas (LNG).
These developments showcased a mutually beneficial relationship, with both nations deriving value benefiting from increased trade volumes.
Shared Strategic Vision in the Indo-Pacific
Trump’s foreign policy significantly bolstered US-India ties in terms of strategic defence and security. His focus on countering China’s growing influence in the Indo-Pacific region aligned with India’s strategic interests. Key developments included:
- The signing of defence agreements like BECA (Basic Exchange and Cooperation Agreement), enabling real-time sharing of geospatial intelligence.
- Enhanced military collaborations under the Quad Grouping(India, the U.S., Japan, and Australia).
- There has been an increased defence trade, with India purchasing American weaponry like the Apache and Chinook helicopters and making deals for missile systems.
These moves strengthened India’s defence capabilities to some extent and, most importantly, signalled growing trust between the two nations.
Potential Challenges Faced by Indian Businesses During Trump’s Presidency
Despite positive developments, Trump’s policies are also expected to create hurdles for Indian businesses:
H-1B Visa Restrictions: The Trump administration’s tightening of H-1B visa norms posed significant challenges for Indian IT companies, which rely heavily on these visas to send skilled workers to the US Major Indian IT firms like Infosys, TCS, and Wipro were forced to adjust their business models and hire more locally in the US.
Tariff Wars: Trump’s focus on reducing the U.S. trade deficit led to heightened scrutiny of India’s trade practices. India lost its Generalized System of Preferences (GSP) status in 2019, which had allowed duty-free exports of certain products to the US.
Protectionist Policies: Trump’s “America First” rhetoric often clashed with globalization, impacting sectors like textiles and auto parts, where India held a competitive edge.
A Tough Stance on China & Its Impact on India
Trump’s firm approach to China resonated strongly with India, particularly as tensions between India and China escalated over border disputes in 2020. His administration imposed tariffs on Chinese goods and restricted Chinese tech companies like Huawei, indirectly benefiting Indian businesses. This created some opportunities for Indian businesses to strengthen their global footprints, especially in sectors like pharmaceuticals, IT, and manufacturing.
India’s Strategic Gains from Trump’s Tough Stance on China
India found itself uniquely positioned to benefit from Trump’s antagonism toward China. Key outcomes included:
Economic Diversification and Investment Opportunities
The global push to decouple from China aligned with India’s ambition to become a manufacturing powerhouse. Initiatives like “Make in India” and “Atmanirbhar Bharat” (Self-Reliant India) gained traction as multinational companies explored India as an alternative to China for manufacturing and supply chain operations. Global Corporations like Apple and Samsung expanded their production facilities in India. India saw increased foreign direct investment (FDI) in sectors such as electronics, pharmaceuticals, and automotive components.
Strengthened Defense and Security Cooperation
India’s long-standing border disputes with China were brought into sharp focus during the Galwan Valley clashes in 2020. Trump’s administration strongly criticized China’s aggression, signalling diplomatic support for India.
U.S.-India defence cooperation increased, with agreements like BECA enabling India to access advanced geospatial intelligence for military purposes.
India’s procurement of U.S. defence equipment, such as Apache helicopters and P-8I surveillance aircraft, was directly linked to countering Chinese military threats.
The Quad and Indo-Pacific Partnerships
Trump’s push for the Quad framework (India, U.S., Japan, and Australia) provided India with a platform to counterbalance China’s regional dominance.
Quad’s maritime exercises, such as Malabar, enhanced India’s naval capabilities and affirmed its role in maintaining a free and open Indo-Pacific. India’s closer alignment with the U.S. on Indo-Pacific issues strengthened its strategic position vis-à-vis China.
Tech and Data Sovereignty
Trump’s stance on Chinese tech firms like Huawei prompted India to ban over 200 Chinese apps, including TikTok, WeChat, and PUBG, citing data security concerns.
This created opportunities for Indian tech startups to develop domestic alternatives, fostering innovation and reducing reliance on Chinese technology.
Challenges for India Amid U.S.-China Tensions
While Trump’s tough stance on China created strategic opportunities for India, it also posed certain challenges:
Economic Uncertainty
The global economic slowdown triggered by the U.S.-China trade war impacted demand in key markets, including India. Export-oriented sectors like textiles, chemicals, and electronics faced disruptions in global supply chains.
Increased Regional Tensions
Trump’s support for Taiwan and criticism of China’s actions in Hong Kong escalated tensions in the Asia-Pacific, raising concerns about regional instability. For India, this necessitated heightened military preparedness, particularly along its northern borders.
Dependence on Chinese Imports
Despite political tensions, India’s economic dependence on Chinese imports—especially in sectors like electronics, pharmaceuticals, and machinery—posed a challenge. Balancing trade ties with China while aligning with U.S. policies required careful diplomacy.
A New Chapter in Indo-U.S.-China Dynamics
Trump’s presidency may be seen as a pivotal moment in global geopolitics, with his tough stance on China & reshaping the international order. For India, this is poised to bring in both challenges and opportunities, reinforcing its strategic partnership with the US while highlighting the need to reduce economic reliance on China.
As India navigates its path in a multipolar world, Trump’s China policy serves as a reminder of the importance of strategic resilience and pragmatic diplomacy. In this evolving landscape, India stands to play a central role, leveraging its partnerships and positioning itself as a key global player in the 21st century.
Why Indians Might Cheer for Trump as President
Despite challenges, Trump’s presidency garnered significant support from certain quarters in India. Here’s an analysis on why:
Cultural Connect and Outreach
Trump’s affinity for India was evident in his public gestures:
- His visit to India in February 2020, highlighted by the “Namaste Trump”event in Ahmedabad, showcased a strong bond with Prime Minister Narendra Modi.
- Statements like “India is a great country, and Modi is a great leader” endeared him to many Indians.
- Trump’s praise for Indian-Americans, who play a vital role in the U.S. economy, further strengthened his image in the Indian diaspora.
Focus on Energy Cooperation
Trump’s emphasis on energy exports enabled India to diversify its energy imports. India became a major buyer of American crude oil and LNG, reducing its dependence on traditional suppliers like the Middle East. This energy partnership helped India enhance its energy security.
Opportunities for Indian Entrepreneurs
Trump’s administration’s trade policies, while challenging, is also expected to incentivise Indian entrepreneurs to innovate and explore alternative markets.
For instance, Indian tech startups began focusing on emerging technologies like artificial intelligence, blockchain, and fintech to reduce reliance on outsourcing.
Many US based MNCs and Global Corporations are setting up their Global Capability Centres (GCCs), Global Innovation Centres (GICs) and Data Centres in India. India is already home to approx. 1800 GCCs and the trend is expected to continue in the years to follow.
Industry data based on trend analytics reflects that India should emerge as a global leader in setting up & hosting such Global Capability Centres (GCCs), and the number is expected to cross the 3500 mark by the year 2030. Also, there is one more emerging area, many mid-sized US Corporations are keenly & intensely looking at India to set up their back-end support services centres (GCCs) in India to effectively seize the India advantage to reduce their cost of operations, substantially to the tune of 40 – 50%, in comparison to their home-based delivery centres. With the emerging Tier-2 city business ecosystem in India, this seems to be a ‘never before opportunity’ for mid-sized corporations to expand their base of operations from the US to India.
The Government of India’s recent economic survey in 2024 reveals the GCCs are expected to contribute to 3.5% of India’s GDP, taking it to $121 billion by the year 2030.
It clearly may be seen as ‘Advantage India’ with the phenomenon ‘India Rising’. With heaps of global-standard talent, technology, and infrastructure in place, India and Indian businesses are certainly going to be placed advantageously compared to other emerging markets. India’s Data Centre capacity, led by large US MNCs & Global Giants, is expected to increase from 880 megawatts in FY 23 to 17 GW by FY 2030. In both the new age and emerging industries, US based MNCs and Global Corporations are going to play an important role, and India, with its current global placement, should expect to be a frontrunner in attracting FDIs from the US and other European corporations and countries.
Support for India’s Security Concerns
Trump’s unequivocal condemnation of terrorism and his administration’s focus on targeting terror networks resonated with India, which faces persistent cross-border terrorism. The U.S.’s increased cooperation with India on counterterrorism efforts was a significant highlight.
Trade and Commerce: The Way Forward
Under Trump’s presidency, India-U.S. trade witnessed a mix of opportunities and challenges. Looking ahead, several areas hold growth potential:
Digital Trade and E-commerce
With India emerging as a global hub for digital innovation, collaborations in areas like fintech, cloud computing, and cybersecurity can deepen.
Clean Energy and Sustainability
Expanding partnerships in renewable energy, especially solar and wind, may serve mutual interests.
Conclusion – The Centre of Contemplation ‘America First’
With Trump in power again, his leadership & tenure should be seen as an opportunity to further strengthen India-US relations, particularly in areas of strategic importance. It also becomes more important in the prevailing geo-political scenario with a special emphasis on China. It’s quite significant to bolster relationships within both countries in the larger & broader global interest.
On the other hand, the world should brace for a continuation of the disruptive, ‘America First’ policies that have intrinsically defined Trump’s administration. For India, this means navigating a complex relationship that offers both challenges and opportunities. While defence and strategic cooperation are likely to deepen, issues in trade, immigration, and climate policy will require careful negotiation.
Ultimately, the India-U.S. relationship under Trump is a testament to the importance of pragmatism and shared interests in fostering strong bilateral ties. As the two largest democracies, their partnership holds significant potential to shape the global order, provided they address contentious issues with mutual respect and foresight.
Donald Trump’s historic comeback for a second term presents both new opportunities and significant challenges for India. The US seems set to adopt a less ideological and more transactional foreign policy under Trump.
Post Trump win in the presidential election, the news agency Reuters wrote, “However, Trump’s history of criticising India’s trade practices suggests that negotiations may be challenging” and AP News wrote “However, Trump’s transactional approach to foreign policy may lead to expectations of greater Indian support for U.S. initiatives, potentially affecting India’s strategic autonomy”.
For Indians cheering Trump, it’s not just about policies—it’s about the promise of a partnership that continues to evolve, offering hope for a brighter, peaceful, and mutually beneficial future.