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Context:

India is hopeful about the India-US relationship under Donald Trump.

Details

India remains optimistic about Trump's return to the White House, however, experts see both opportunities and challenges in India-US relations during his second term.

Strategic Relations to improve

India is expected to become a key partner in the US strategy to oppose China, especially in the Indo-Pacific area. Trump's commitment to oppose China's expanding power is in line with India's strategic objectives to maintain a "free and open Indo-Pacific." 

India is a vital member of the QUAD alliance, and the cooperation is probably going to concentrate on increasing defense, intelligence sharing, and military presence in the area.

Uncertainty  in Trade 

Donald Trump's "America First" policy may result in higher tariffs on Indian exports, which would especially impact the textile, pharmaceutical, and IT industries. During the 1st Term, Trump criticized India's trade policies, therefore there is a chance to increase trade tensions between the US and India.

He has criticized India's high tariffs and may now encourage India to lower them. As part of his broader protectionist agenda, the United States may put more taxes on Indian imports. 

• This could reduce Indian export competitiveness in the US market, hurting revenue for Indian companies. 
• However, India's exports could gain from Trump's "China+1" policy, which pushes businesses to diversify their manufacturing away from China.

His economic policies may create higher inflation in the US, the US Federal Reserve's efforts to reduce inflation may have an impact on Indian monetary policy as well.

• For example; Higher interest rate announcements by the US Central Bank will increase volatility in the Stock market, as investors will see good return options in the US, they will shift their investment to US, this will increase outflow from the Indian market and also impact new foreign investment in India.

The Indian Rupee may continue to decline as a result of Trump's protectionist economic policies and the possible appreciation of the US dollar. In the coming months, experts predict that the rupee will weaken, and it may even cross the 85.0 mark. Due to the volatility of the world economy, the US dollar's strengthening may further put pressure on the Indian rupee.

Trump's economic policies including tax incentives for manufacturing firms may increase inflation in the USA, which will indirectly affect global economic growth. India may be impacted by these policies and possible slowdown in international trade will affect its trading relations mainly with China and Europe. According to experts, India may experience a slowdown in its own economic growth and a decline in the demand for its exports if global growth slows.

Strengthen Defence Partnership 

It is expected that Trump's comeback will improve India-US defense and geostrategic cooperation to combat China's expanding influence in the Indian Ocean region and Indo-Pacific Area.

Trump made major contributions in strengthening defense ties with India during his first term in office. The signing of fundamental defense pacts like BECA, COMCASA, and LEMOA, which improved security cooperation, logistics support, and intelligence sharing, was one of the major turning points. 

India-US defense trade is expected to increase during Trump's second term, with more transfers of advanced military hardware and technology. India's shift away from dependency on Russian military hardware and toward diversifying its defenses with American-made systems is probably going to Increase.  

His administration will likely speed up high-tech military agreements and improve collaboration with India. 

India could benefit from more defense trade, deeper security coordination, and improvements in military technology transfers due to earlier agreements like BECA, COMCASA, and LEMOA.

Concern about US immigration Policy

India is concerned that US immigration laws may become stricter, especially with regard to H-1B visas. Stricter regulations could hurt professional mobility between the two nations as well as the Indian IT industry. His suggested green card regulations for international graduates, however, might offer some relief.

Impact on India-Russia Relations

India will be able to maintain its strategic autonomy in its relations with Russia, due to Trump's optimistic relationship with the Russian President, his strategy may reduce regional and global tensions, which will allow India to handle its complicated diplomatic situation without excessive pressure to take sides. 

Conclusion

The India-US relationship may face both opportunities and challenges under Trump's administration. India is expected to gain from potential increase in defense trade, however, Trump's "America First" policies may result in higher tariffs and increased trade tension, particularly in industries like textiles, IT, and pharmaceuticals. Navigating these challenges while maintaining close economic ties with the US may present significant challenges for India.

Must Read Articles: 

INDIA-US TIES

INDIA US DEFENCE RELATIONS

INDIA-US DEFENCE RELATIONS

INDIA US TRADE POLICY

SHADOW FLEETS AND SANCTIONS

SANCTIONS AND IMPACT ON INDIAN ECONOMY

Source: 

Indian Express

DW

India Today

Business Today