Broad promises made by the Trump 2.0 campaign to Americans, including curbing inflation, could benefit India as they could dampen oil prices and lead to an early end to the Ukraine-Russia conflict, officials said, adding that the new regime could revive tariff negotiations between India and USA. provides opportunities for further expansion of trade.
The new US government is unlikely to ignore current global economic realities and geopolitical dynamics when making any major policy decisions vis-à-vis India, and the second Donald Trump administration (Trump 2.0) is expected to be more engaging and cooperative, they added with the request about anonymity. While the global geopolitical situation has changed radically since the beginning of 2021, India’s economic strength and global standing have only grown, which is why trade negotiations between the two partners can be amicable and mutually beneficial, they said.
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One of the people, a senior government official, said the Narendra Modi government has worked cordially with all three regimes — the Obama administration, the Trump administration and the Joe Biden-Kamala Harris administration. Each time, the economic relationship between India and the United States strengthened. “Both Prime Minister Modi and President Trump are experienced world leaders with a common agenda – a strong, secure and prosperous world,” he said.
Both government officials and industry experts said India and the US are ready to strengthen their strategic relationship as they share a common goal – to strengthen democracy, stop illegal immigration, control money laundering and crush terrorism.
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The people acknowledged that Trump’s “America First” agenda will affect India’s trade with the US, but will also give it an opportunity in terms of friendship. The US will need to import several goods to protect Americans from rising inflation and for these goods, India could be the preferred supplier if the US curbs Chinese imports through higher tariffs, they pointed out. During his campaign, Trump said he would impose a 10-20% tariff on all imports and a higher tariff of 60-100% on Chinese imports. It would make Indian garments, shoes and toys competitive in the US market.
“India and the US have recently settled their disputes amicably, outside the WTO (World Trade Organisation). The two countries are always willing to negotiate all trade issues, including customs issues bilaterally, for mutual benefit,” said a second official.
Ajay Sahai, Director General of the Federation of Indian Export Organizations (FIEO) said that both India and the US recognize each other’s strengths. “Still, the US can bargain for more market access in areas such as agriculture, medical equipment and IT hardware. The two partners will negotiate such matters while keeping each other’s sensitivities in mind,” he said.
Some experts said Trump’s election could add to uncertainty on several trade issues, but believe the end result will still be beneficial from a larger India-US perspective. “It will strengthen the overall strategic partnership, especially in the defense space,” said Nilaya Varma, CEO and founder of consulting firm Primus Partners, adding that the Trump administration could work with India to “counter Chinese influence” by increasing strategic partnerships and investments .
But there is also a perception that the US could take a protectionist turn and influence India
Agneshwar Sen, partner-tax and economic policy (International Trade) at EY India said the US will use high tariffs “strategically to onshore manufacturing and change current supply chains” which could see India face higher tariffs on exports of textiles, chemicals, pharmaceuticals and automotive/technology products. “India must either seek alternative markets (which will be difficult) or retaliate with its own tariffs on US exports”.
The solution, Sen added, could be a “trade deal that is attractive to the US” and also protects India’s interests.
If the trade policy measures, such as across-the-board tariff hikes discussed during the election campaign, are implemented, “We may well go back to the pre-WTO era with a ‘spaghetti bowl’ of free trade agreements. India will do well to be fully prepared and negotiate on a free trade agreement with the U.S. We have to be ready to discuss a wide range of issues that will be put on the table, he said.
The US is one of India’s largest trading partners. It exported goods worth $77.52 billion to India in 2023-24 and imported goods worth $42.2 billion. India exports drugs and pharmaceuticals, telecom instruments, pearls, precious and semi-precious stones, textiles and marine products. It imports crude oil, petroleum products, coal, IT hardware, ships, boats, electrical equipment and other goods from America.
