The U.S. will see a change in the White house as Donald Trump has been elected the 45th president of the country. This victory of Donald Trump is being viewed from many different perspectives. For many, it is an unexpected and surprise victory contrary to the media speculations. On the other hand many people already anticipated that this victory would be possible for Trump. The victory of Trump has raised numerous questions because; firstly, he has never held public office or governance related job prior to this and secondly due to various controversial speeches which he delivered as part of his election campaign. Trump’s eccentric election campaigning has added many questions in the minds of the people all around the world that what would be Trump’s impact around the globe? Especially from India’s perspective, it becomes very important to know that how the Trump government will affect India? We have tried to analyze both questions in detail so that a solid outlook can be built on this issue.
Trump’s love for India and admiration for Indian Prime Minister:
Governance would be a very new dimension for Trump as he has no prior experience of serving in any administrative role. In his entire campaigns, he constantly mentioned India on various issues and on different platforms. During his presidential campaign since June last year, he has been both critical and complimentary about India. The Indian, who see the leadership of Prime Minister Narendra Modi making a stronger and muscular India in South Asia, have endeared Trump. Trump’s strong views on extremist practices under Islam, do find an echo with most of the Indians. While talking on terrorism in an interview three months ago, Trump termed Pakistan as “probably the most dangerous country in the world today” and he went on to say that “India is the check to Pakistan. You have to get India involved. They have their own nukes and have a very powerful army. They seem to be the real check. I think we have to deal very closely with India to deal with it (Pakistan).”
Last month at an event whose theme was ‘Humanity against terror’ which was organized by a Republican Hindu group, Trump said if he was elected President, then India and its citizens would have “a big friend in the White House”. To garner maximum votes from the Indian community in the United States, Trump played the Hindu card by showing his love for Hindus. People applauded thunderously as he said many times ‘I love Hindus’.
Trump, in an interview, said ‘India is doing great’ but no one likes to talk about it. He on various occasion talked about India and Indian Prime Minister Narendra Modi. He said at an election campaign that during his Presidential period ‘India-USA will become best friend’. He also supported India’s fight against terror.
Impact on India-US Relations after Trump:
India and US relationship is vitally important which goes beyond economic, commercial or people to people ties. Both these nations are flying high with shared democratic values. Therefore, in coming days it will become stronger and more stable.
However, India needs to act upon some of the policies which may get impacted with Trump sarkar.
The vital association between India-US depends on two main policies ‘Act East and Asia Pivot’. New Delhi will be concerned if the new government adopts a more value-based way to deal with universal security in the Asia-Pacific region. Trump during his campaign speech said that the US's closest partners in Asia; South Korea and Japan should take the expense of US troops on their dirt. Therefore, Asia’s regional security and peace might go for a toss if these terms are implemented by Trump administration.
Another concern for India and world is climate change. During his campaign, Trump once said that climate change is a Chinese conspiracy and vowed to withdraw from the climate change agreement signed at Paris. Whereas, Mr. Modi himself took extra interest to clear the hurdles of this treaty. In future, Modi may find it tough to deal with Trump administration over this issue.
Other than these concerns, there are other issues where Trump is expected to do some wonders for America and for Americans, as he rode to power by promising larger interest of Americans.
Here we’ll look into the micro details of different areas which will not be the same again after Trump’s presidential era.
1) Reviving the American Economy: Trump declared that he has made plans to boost the GDP of the U.S. to 4 percent by adding 24 million jobs over the next decade. His main tools to complete this task are his advocacy of lowering corporate tax rate and facilitating regulatory frameworks for business. He has also assured to cut-down federal spending to balance the budget through his penny plan. The penny plan envisages one percent reduction for every dollar in the federal budget in the upcoming years. This will give private businesses an opportunity to create jobs to achieve Trump’s targets. The EB-5 visa program is likely to further gain grip in India. Under the provisions of EB-5 visa program, Indian companies would be allowed to invest a minimum of $1 million and create at least 10 new jobs for American workers. And setting up of business means they would be eligible for the green card. The total number of expected millionaires by the end of 2016 would be 2.25 Lakhs in India. This provision would create new opportunities for Indians to invest in the U.S.
|What is H1B Visa?
The H-1B is a non-immigrant visa in the United States under the Immigration and Nationality Act, section 101(a) (15) (H). It allows U.S. employers to temporarily employ foreign workers in specialty occupations. If a foreign worker in H-1B status quits or is dismissed by the sponsoring employer, the worker must either apply for or be granted a change of status to another non-immigrant status, find another employer or leave the U.S.
What is EB-5 Visa?
The EB-5 immigrant visa category is for professionals with advanced degrees and individuals with exceptional ability in the sciences, arts, or businesses. It generally requires a job offer and a labor certification issued by the Department of Labour (DOL) in The U.S. The labour certification process exists to protect U.S. workers and the U.S. labour market by ensuring that foreign workers seeking immigrant visa classifications are not displacing qualified U.S. workers.
2) Curbing Immigration: Trump has shown his radical and extremist approach while talking about immigration. His attacks were primarily targeted towards Mexicans. Trump also advocated building a wall along the Mexico border and making Mexico pay for it. He also strongly advocated that Americans should be prioritized for open jobs and skilled visas should be restricted so that more jobs could be available to Americans. This immigration-related news would be bad news for top IT firms who make billions by using H1B programme.
H1B program allows low-cost skilled Indians to work in the U.S. The US issued 172748 H1B visas in 2015. And many of those visas were issued to Indians employed by companies like Infosys, TCS, and Wipro. In 2014, Infosys alone applied for more than 24000 Labour Condition Applications (LCA) which are required to obtain these visas. Many U.S. companies which are doing their business from India like Cognizant also send their employees to the U.S on these visas. Indian workers demand lower wages in compare to U.S, workers. At the start, Trump had lambasted the H1B visa regime. But later in order to get support from Indo-U.S. community, he softened his stand on H1B visa programme. But as history suggests, Indian companies know that every American presidential candidate opposes the H1B visa programme while campaigning but no action has been taken by them to curtain these visas in office.
3) Foreign Policy and Terrorism: During the whole campaign, Trump used very strong words to eradicate ISIS and control immigration from those countries that export terror. India has witnessed the marginal support for ISIS among youths. If the restriction of immigration and terror export is successfully implemented then it would hurt Pakistan. The Indian government would be looking forward to Trump’s plan to establish a commission on radical Islam. Trump has argued to use media to launch an ideological battle against the core ideology and convictions of radical Islam. Trump has also promised to expose radical Islam promoting networks within American society. This promise from Trump has boosted Indian government to build its own domestic security policies. The Indian government has taken a proactive step to use National Investigative Agency to track any support for ISIS.
4) The Energy Plan: Trump has talked about his plans to unleash America’s shale oil, coal reserves and natural gas to make U.S energy self-sufficient. President-elect, Trump had also promised to grant permission to open onshore and offshore drilling, and to lift the moratorium on coal and to lease federal lands. While paying a price for oil in India, like many other countries, people have to be depended at the mercy of Organization of Petroleum Exporting Countries (OPEC). India’s domestic companies get affected by a rise in the price of fuel. It puts the target of fiscal deficit on the shoulders of the government and finally it leads to a hike in the prices of essential goods. In the oil sector, India could benefit immensely, if Trump executes this plan because opening up of the US oil sector could lead to global price stability. This move of the U.S. can create massive business opportunities for India’s state- owned oil companies such as Oil and Natural Gas Corporation of India (ONGC) whose foreign arm ONGC Videsh Limited (OVL) has been its operations globally.
5) Scrapping Obamacare: Trump has advocated scrapping Obamacare which brought the uninsured Americans under the government healthcare domain. Mainly, it was established to provide affordable healthcare to Americans. There are many speculations about how the scrapping of Obamacare would impact the Indian pharma sector. As we have mentioned above that pharmaceuticals are the second biggest exports of India to the the U.S. India manufactures affordable generic drugs which complements the objectives of Obamacare. Under ‘Obamacare’, Indian generic drug companies got a sub-legalization that allowed the use of “biosimilars”. Indian companies benefitted massively from it.
The data of US Census Bureau shows that at the time when Obamacare was enacted into a law in 2010, the total pharma exports of India to the U.S were $31 billion. And during five years of Obamacare, the total pharma export from India to the U.S. got doubled to $66 billion. If the scraping program advocated by Trump gets implemented, it will badly hit Indian drug companies. Indian IT companies which are associated with this program could concede losing their business that could result in job cuts in India.
6) On NAFTA and Other Organizations: Trump took a dubious stand on the multilateral treaties such as North American Free Trade Agreement (NAFTA) and proposed Transatlantic Trade and Investment Partnership (TTIP). On the other hand, he advocated that he would prefer to negotiate bilateral deals which would be Favourable to the US manufacturing.
The U.S signed NAFTA with Canada and Mexico in 1992. It has helped Mexico to enhance its exports to the US significantly. A total of $295 billion worth of goods were exported from Mexico to the US in 2015 .The US has become India’s number one export destination. India’s exports to the U.S. amounted to 15.37 per cent of India’s total export market in 2015-16. India exported $40.33 billion worth of goods to the U.S, but India’s import bill was just $21.81 billion of goods from The U.S. Multilateral treaties such as NAFTA, give significant export tariff concessions to other countries like Mexico. If such treaties are junked by the Trump administration, then India would benefit from it as it can open the opportunities to increase its textile products export to the US.
7) Impact of Tax Reduction Plan: Trump has highlighted his plans to reduce corporate taxes to 15%. The present rate of corporate tax is 35%. This drastic reduction in the taxes will make USA one of the most attractive places in the world for Business. It will impact more especially to American businesses that have set up their offices in other countries to increase their profitability by paying fewer taxes. If this plan is implemented in USA then American business in India could be attracted back to American soil. But on other hand, The US companies who are doing business from outside of USA such as India have been performing well. The case of Ford motors is one of such cases. The manufacturing unit of Ford declared it’s highest ever export in this August. Ford India exported 67 percent of all its vehicles which were manufactured in India. Ford India made a significant investment in the flourishing business of car rentals in India by investment in Zoomcar. Ford India pays the same corporate tax rate in India as it pays in the US. If the Trump government reduces the tax to 15% then it can tempt Ford India to move back to USA from India. That would be bad news for over 2000 employees working at the Ford factory in India. And if Trump makes this tax reduction move then it can also tempt other American business to move back to USA.
8) Trump on Chinese Trade: Trump has criticized China during his whole campaign. He called China a currency manipulator. Trump has repeatedly cited imposition of higher tariffs on good manufactured in China. He has also advocated filing litigation against China for stealing American trade secrets and initiate trade cases against China at the World Trade Organization to compel it to cut down its trade subsidies. Trump has focused on the need to cut down the trade deficit with China which reached a record high of $365 billion in 2015. If this promise made by Trump gets fulfilled then it will have hardly any good implications on India. That’s because Chinese manufacturing and existing trade with the U.S is much older than India. Computers constitute the biggest import of the US from China. US Census Bureau data shows that USA imported computer hardware and telecommunications equipment worth $74 billion and $100 respectively 2015 from China. In comparison to this India’s telecom and computer equipment exports to U.S was just above $2 billion. Gems, pharmaceuticals and diamonds are India’s biggest exports to the U.S. The total worth of all these three exports is at $66 billion. China, meanwhile, exports $20 billion worth pharma products’ to the U.S. So Trump’s promise to curtail trade with China could create new opportunities for India’s pharmaceutical companies.
The above analysis shows that it is difficult to speculate that whether Trump government would be good for India or it would be bad. As we have seen the effect of some of Trump’s plans are beneficial for India and some plans also affect India negatively. Overall, the Trump government would be benevolent for India as the positive impacts outnumber the negative ones.