By Subrata Majumder
Come November 5, global futurists are scrambling to anticipate how a second term of Trump’s Presidency bode for the world and India. According to the latest opinion poll by New York Times, Kamala Harris has marginal edge over Trump. But, it does not foretell the demise of Trump chances for second term.
Indian industry people are closely monitoring the poll speeches of the two Presidential candidates Kamala Harris and Donald Trump and trying to assess their relevance to the India-US business relations. Indian business people have felt with both first term of Trump and the present term of the Democratic President Joe Biden. They have not found much difference in the trade and business relationship. But some of the industry leaders feel that Trump’s economic policies may be helpful to India in expanding its domestic market and exports.
Kamala Harris, though half Indian by heritage, does not augur well for special priority on USA-India relations, they feel. Reality lies with the background during Biden administration, when strengthening of US-India relation was geared by Presidential initiative, rather than vice president Harris’s Indian heritage.
For this section of industry, it is a mix of concern and comforts. If Trump comes back to power. Trump’s emphatic focus on protectionism is a matter of concern. At the same time Trump’s hard stand against China bodes well for India s India will be far more competitive against China in the export market as the Chinese products will be higher priced as a result of US measures against China.
Donald Trump said he will impose 10 percent import tariff on all nations and 60 percent on China. His America First will get a push to instill confidence of Americanization in every policy where “Every decision on trade, on immigration, on foreign affairs will be made to benefit American workers and American families”, which was outlined during Trump’s first term. How will India shift gear on the line of USA’s “America First” Policy?
Past experiences show a different template. Despite India losing Special Status (GSP scheme) in USA trade policy during Trump’s first term (2017-21) and USA harping on non-reciprocal entry, USA continued to be one of the biggest entry of Indian products. It became three times biggest trading partner, with India exporting and importing less.
India exports mainly four products to USA. They were diamonds and jewellery, apparels and textile, oil refinery products and pharmaceuticals. If Trump imposes 10 percent import tariff, imports of these 4 products groups should be affected. But, the reality lies somewhere else.
The biggest export item by India to USA is diamond and jewellery. Apparently, import tariff should impact India’s export of diamond and jewellery. But, there is a catch. India has an edge over its competitors, such as Israel and Belgium. India is the largest cutting and polishing centre of rough diamond in the world. US bridals prefer for customize design of India.
Similarly, Indian pharmaceutical industry play an important role in US market. According to a report, Indian companies account for about 47 percent of generic prescriptions filed in USA by 2022.The core issue of trade partnership with USA is that India continued to be the surplus trade partner, despite Trump’s protectionist policy.
Notwithstanding these contentious issues, India’s exports to USA spurred during the Trump period. In other words, India’s export to USA remained resilient despite Trump’s withdrawing of Special status to India. During 2017-18 to 2020-21, India’s export to USA jumped by over 59 percent. Its surplus trade balance widened further from US$21.3 billion in 2017-18 to US$ 22.8 billion in 2020-21.
Indo-Pacific region will emerge an important pivot in Trump’s second term, which will showcase a turning point of Trump led USA –India relation. USA will play key role in the newly formed IPEF (Indo Pacific Economic Forum). In this new dynamics, where India will also sit in the driver seat, USA-India relation will witness a different template, according to these industry people.
India will have to brace for two challenges with new Trump’s America .First, trade and second immigration. Given India’s protracted surplus trade with USA, it is obvious Trump administration will press hard on balancing trade surplus with India. Trump’s administration will press for stringent non-reciprocal entry in USA. This means Trump will enforce India to import more from USA to counter balance the surplus.. Currently, major items of imports from USA are oil refinery goods and edible products like nuts.
Another important issue will be restriction on immigration. During the first term, Trump administration blocked visas for wide variety of jobs for non-Americans, including those for computer programming and other skilled workers under HI-B visa. Stephen Miller, the architect of Trump immigration policy has restricted the immigration, arguing that they harm employment prospect of Americans.
India is the biggest beneficiary of HI B visa .Annually, more than 70 percent of HI B visa is issued to Indian applicants. Trump administration will surely lay down restriction on India’s IT professionals entry in USA to protect the Americans for jobs.
Another issue, which attracts attention against Trump’s conservative policy is that during his first term US investment in India boomed. It increased five times in India – from US$ 2.1 billion in 2017-18 to US$ 10.5 billion in 2021-22. This demonstrates Trump‘s wide outlook to promote American investment in India in big Indian market and a far reaching bigger role in Indo-Pacific region.
Given these, Trump’s returning back in power does not bode ill to India. With upcoming of IPEF (Indo Pacific Economic Forum ), which let USA to play Big Brother role to counterbalance China and Indian Prime Minister Narendra Modi taking the driver seat, Trump’s administration is likely to be more moderate than before, these sources feel.
Experts on India-US relations say that the trade and investment relations do not depend solely on official policies, the personal relationship also plays a role. Narendra Modi had established a personal rapport with Donald Trump during his tenure due to the commonality of conservatism. But Kamala Harris is different. She is a human rights lawyer, a bit leftwing and quite opposed to the agenda of Hindutva pursued in India and also in USA by Narendra Modi’s party. The Hindu groups in US were closer to Trump in his first term. The same will not be happening if Kamala comes to power.
So the Prime Minister Narendra Modi will have to establish a fresh equation with Kamala if she comes to power. It is not difficult in view of her deep Indian connections.. Our PM is expert in cultivating ties and making new friends. If that happens, it will be far easier for the Indian industry to emerge stronger in the coming years by getting larger US direct investment and technology and also expanding the export market. In any case, Indian industry is resilient enough to adjust with any regime in USA. (IPA Service)
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