As the results of the most divisive of US Presidential elections are coming in, they are being keenly watched across India, too. While it may even take a few days for the winner to become known, with the incumbent President Donald Trump, threatening to go to the Supreme Court to stop all counting, what will be the impact of the result on India-US economic relations?
According to experts, India is too big a market to be ignored either by the Democrats or the Republicans and both would favour greater trade ties. At the same time, both are capable of acting against India’s interest to serve their own. So, India needs to watch its steps irrespective of who comes to power.
Indeed, Trump had started on a belligerent note soon after assuming office in January 2017 by identifying India as one of the countries to be investigated for having a trade surplus with the US.
Trade-related consequences
India tried hard to explain that its trade surplus with the US, which was around $24 billion at that time (declining somewhat since then), was due to export of items used as inputs by the American industry. But the Trump administration wouldn’t be placated.
Trump’s actions against India have been mostly unilateral and outside the multilateral WTO process. He also withdrew the Generalised System of Preferences (GSP) scheme. But this can partly be attributed to the President’s mode of operating as he has treated many other countries in the same arbitrary manner.
Tightening H-1B norms
A point against the Trump administration could be the tightening of H-1B visas used extensively by the Indian IT industry operating in the country. But here, one must recall the steep increases in H-1B and L1 visa fees by the Obama government for funding the healthcare programme. Despite several pleas from India, they weren’t revised.
Targeting Indian skilled workers in the US when it suits the country’s interest is something that both the Republicans and Democrats engage in, and it is India which needs to handle the situation adeptly.
The Indian IT industry, in fact, has been handling the visa issue with maturity. “We expect the H-1B visa programme to continue whatever might be the outcome of the US presidential elections. Some of the decisions are political in nature....and we have to learn to live with it,” said UB Pravin Rao, COO, Infosys. Rao said the company had de-risked itself with more hirings in the US and about 63 per cent of the workforce in the US comprised locals.
So, when Indians evaluate whether a Democratic or a Republican regime in the US would be better for the country, political, social and humanitarian considerations may be of greater consequence than economic.
(With inputs from K Giriprakash)