Trump’s focus on “America First” and domestic issues could further isolate the United States from other countries.
Trump’s return has brought a new beginning to US-India relations. Unlike his predecessor, who was critical of India’s domestic affairs, Trump’s approach is expected to be more pragmatic. He is likely to prioritize mutual benefit and cooperation over ideological differences – in other words, prioritizing common goals and practical interests over different political beliefs or systems – which could lead to a stronger, more transactional Sexual partnership.
India benefits from Trump’s domestic focus
Trump’s focus on “America First” and domestic issues could further isolate the United States from other countries. Because he puts U.S. interests first and wants to focus on domestic issues, that could mean he becomes less involved in international affairs and weakens relationships with other countries. In short, he could pull the United States away from global partnerships and instead focus on its own concerns.
This could give India the space it needs to exert greater influence in South Asia and the Indo-Pacific. This situation, while seemingly negative, may unexpectedly create opportunities for India to increase its power and importance in these areas.
The Challenge of Trump’s Trade Policy
With reduced U.S. involvement, India may have more freedom of action. That could mean taking stronger measures against China’s growing power and working to create more stability for neighboring countries.
The Biden administration’s actions have cast doubt on the Indian government. Allegations of human rights abuses, including concerns over the treatment of religious minorities, restrictions on free speech, the situation in Kashmir and the treatment of Dalits and indigenous peoples, as well as allegations of US interference in Indian politics – particularly the impact of US support for non-governmental organizations Indian Affairs – Stirring concerns that the United States is seeking to limit Prime Minister Narendra Modi’s powers.
Tensions between the United States and India have worsened as the Biden administration openly supports a military takeover of Bangladesh and resumes military aid to Pakistan. This further exacerbated the distrust between the two countries. If Trump wants to improve relations with India, he needs to see India as more than just a counterweight to China’s power. He needs to realize India’s own importance and interests.
According to the First Post, the United States under Trump is not trying to control every part of the world. This means that the Quad group consisting of the United States, India, Japan and Australia may become stronger. They may even begin planning to cooperate militarily, demonstrating that their shared concerns about China outweigh individual actions.
With Trump taking office, the US State Department’s negative view of India is expected to decrease. This should lead to a de-emphasis on relationships and a focus on strengthening cooperation in important areas such as space and defence. If Trump is re-elected, he may continue to pursue tough trade policies. This could cause problems for India, which may impose a 10% tax on all imports to the United States. India needs to decide whether to retaliate or try to negotiate a tax avoidance deal.
India benefits from China-related shifts
Trump is likely to keep interest rates high for an extended period of time. This could make it harder for foreign companies to invest in Indian stocks. However, companies looking to move away from China may choose India, creating new opportunities for the Indian economy.
i) US interest rates rise: When the Federal Reserve raises interest rates, US investments become more attractive to foreign investors. That’s because higher interest rates typically mean higher returns on investments, such as U.S. Treasury bonds. This increased attractiveness may attract investment from other countries, including India. Foreign investors may shift their funds to the United States to obtain higher returns, thereby investing less in Indian financial markets.
ii) Impact on FPI in India: Foreign Portfolio Investment (FPI) refers to investments in stocks and bonds. If rising interest rates in the US pull investments away from India, it may lead to a fall in FPI in the Indian financial market. This could have a negative impact on the Indian stock market and the availability of funds for Indian corporates.
iii) “China plus one” strategy: Many multinational companies have important operations in China. However, doing business in China comes with increasing risks, including geopolitical tensions, trade disputes and regulatory uncertainty. As a result, companies are seeking to diversify their manufacturing and supply chains, adopting a “China plus one” strategy. This means building production facilities or purchasing materials from countries outside of China to reduce these risks.
iv) India as beneficiary: India is well positioned to benefit from the “China plus one” strategy. It offers a large and growing market, a skilled workforce and improving infrastructure. Companies seeking to reduce their dependence on China may choose to invest, set up factories or outsource work in India. This will boost the Indian economy and create jobs.
In short, while rising U.S. interest rates may have a negative impact on foreign investment in India, the potential for companies to shift operations away from China provides a balancing opportunity. The net impact on the Indian economy will depend on which of these forces is stronger.
Seizing the opportunity: India’s global leadership
As Trump reshapes his “America First” policy in Asia, New Delhi may question whether “Make America Great Again” (MAGA) can be transformed into a “Make India and America Great Again” (MIAGA) approach. This shift raises the possibility of aligning U.S. interests with Indian goals, potentially benefiting both countries.
India has a chance to step up but will need to make some tough decisions. India may need to adjust its strategy and play a greater military role internationally. It could also mean opening up parts of the market to U.S. companies. Under Trump, the partnership is likely to be more balanced and less one-sided.
(The author is a defence, aerospace and political analyst based in Bangalore. He is also the Director of India’s ADD Engineering Components Pvt. Ltd, a subsidiary of Germany’s ADD Engineering GmbH. You can contact him at: girishlinganna@ gmail.com)
(Disclaimer: The above opinions only represent the author’s personal opinions and do not represent the opinions of DNA)
