The following blog post is also available at the Griffith Asia Institute.
When Donald Trump secured a stunning victory in the US Presidential elections, Prime Minister Modi of India promptly ‘tweeted’ him congratulations and hoped that India-US relations would scale new heights. Trump himself has spoken warmly about India, most notably at an event hosted by the Republican Hindu Coalition just prior to the US Presidential elections.
One can thus expect a close relationship between the Trump and the Modi government. Yet, the anticipated economic benefits flowing to India from such a relationship are not obvious.
India might become a victim of a global growth slowdown if Trump’s protectionist policies are fully enacted. In terms of specific sectors, the Indian pharmaceutical and IT companies are likely to be adversely affected. The former gained considerably from ‘Obamacare’ (or The Patient Protection and Affordable Care Act) as it enabled Indian pharmaceutical companies to establish themselves as competitive suppliers of generic drugs. Trump seeks to repeal Obamacare.
The Indian IT sector has gained a great deal from the outsourcing strategies of US companies. This might change as Trump has often noted that he wishes to bring back jobs home by finding ways of curtailing outsourcing. More generally, Trump’s anti-immigration stance might have a negative impact on skilled migration from India.