November 23, 2024
1 min read

India Seeks Supply Chain Edge With Trump Back In Office

The potential for higher US corporate tax cuts may enhance IT spending, benefiting Indian IT companies

As Donald Trump returns as the next US President, India could actually bolster its position in global supply chains, particularly in technology sectors like AI and semiconductors, due to previous investments and policy shifts such as the “China+1” strategy, according to a report on Saturday.

The potential for higher US corporate tax cuts may enhance IT spending, benefiting Indian IT companies, according to the report by Motilal Oswal Private Wealth (MOPW).

“Indian businesses in sectors such as pharmaceuticals and defence might also find new opportunities, especially if US-India collaboration strengthens in response to a more robust Indo-Pacific defence strategy,” the report mentioned.

Trump’s second term is filled with both promises of economic growth and challenges of global trade tensions.

The strength of the US dollar and fiscal policies could significantly influence global markets, driving various strategic realignments. As policies unfold, countries and sectors must remain nimble to adapt to the evolving landscape fuelled by “Trump II.”

Prime Minister Narendra Modi and US President Donald Trump during a meeting on the sidelines of the UNGA74 at United Nations on Sep 24, 2019. (Photo: IANS/MEA)

According to the report, Trump’s ‘America First’ policy could reshape international trade. His approach involves reducing imports, particularly from China, to bolster US manufacturing.

Emerging markets face a mixed bag of challenges and opportunities.

Some countries could see increased costs for exports due to a stronger dollar and higher tariffs, particularly affecting IT and pharmaceutical sectors. Conversely, nations like Mexico may benefit by diverting manufacturing operations from China.

Geopolitically, Trump’s policies are likely to intensify tensions with China and could alter alliances, as countries like Japan and South Korea reassess their strategies.

According to the report, the EU may seek to become more self-reliant and potentially foster new alliances beyond the US sphere of influence.

Meanwhile, Trump’s protectionist trade policies and their impact on India need to be watched out for in the coming months, it noted.

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