India US Relations Introduction 

• The re-election of Donald Trump as President of the United States promises a shift in U.S. policy directions that will impact both American and global landscapes, with potential implications for India-U.S. relations.
•  Trump’s previous term saw significant policy changes across areas such as trade, immigration, defense, and foreign relations. 
• Now, with a renewed mandate, Trump’s second term may bring both challenges and opportunities for India. This article explores how Trump’s leadership could shape India-U.S. relations in the years to come.

India-U.S. Relations: An Evolving Partnership

• Over recent years, India and the U.S. have built a robust strategic partnership focused on defense, economic cooperation, and a shared vision for regional stability, particularly in the Indo-Pacific. 
• While each administration has brought a distinct approach, Biden continued building on the foundation laid by Obama and Trump, cementing India’s role in U.S. strategy toward Asia.

Key Developments in Recent Years

• Continued Strategic Prioritization: Biden continued Trump’s focus on India, reducing the importance of Pakistan in the U.S.’s strategic calculus and emphasizing China as a central challenge.
• Quad Elevation: Under Biden, the Quadrilateral Security Dialogue (Quad) involving the U.S., India, Japan, and Australia was elevated to summit-level meetings, underscoring the commitment to regional security.
• Technology Partnerships: The iCET initiative launched in 2023 aimed to enhance cooperation in emerging tech areas, such as semiconductors and aerospace, strengthening the India-U.S. tech partnership.
• Economic Strategy: Trump-era tariffs on China were maintained under Biden, focusing on supply chain resilience and opening avenues for India as a strategic trade partner.
• Defense Collaboration: The U.S. is now the largest importer of Indian defense products, receiving about 50% of India’s defense exports.
• Regional Stability and Security: Through the Quad, the Biden administration expanded cooperation in cybersecurity, maritime security, and disaster relief, aligning with India’s approach to maintaining a non-military stance in the region.

Current Challenges in India-U.S. Relations

• Disagreements on Russia: India’s balanced position on Russia’s actions in Ukraine contrasts with U.S. expectations for a more critical stance.
• Diplomatic Tensions: Comments from U.S. officials on India’s democratic health and religious freedoms have led to diplomatic spats, including India summoning a U.S. diplomat in response to remarks by Ambassador Eric Garcetti.
• Alleged Plot Involving Indian Officials: A reported plot involving Indian security officials targeting a U.S. citizen has introduced an additional layer of tension and trust issues.

Trump’s Global Policies and Their Controversial Nature

• Trade Protectionism: Trump’s “America First” policy involved imposing tariffs on imports to protect U.S. industries. His proposed 10% tariff on all imports could further disrupt global trade, potentially affecting India.
• Criticism of NATO Allies: Trump criticized NATO allies for not meeting defense spending commitments, suggesting reduced U.S. involvement in alliances, which could destabilize international security coalitions.
• Restrictive Immigration: His strict immigration policies, notably H-1B visa restrictions, impacted Indian professionals and reduced skilled migration.
• Climate Policy Changes: Trump’s withdrawal from the Paris Agreement created uncertainty in global climate efforts, drawing criticism from environmental advocates worldwide.

Key India-Specific Policies During Trump’s Previous Term

• Defense Cooperation: Trump designated India as a Major Defense Partner, which facilitated the transfer of advanced military technology. The 2018 COMCASA agreement further enhanced military interoperability between the two nations.
• Trade Frictions: Trade increased between the two nations; however, disputes over tariffs and market access led to the U.S. revoking India’s preferential trade status under the Generalized System of Preferences (GSP), affecting several Indian export sectors.
• Strategic Alignments: Trump reinvigorated the Quad as a strategic counter to China in the Indo-Pacific, with India playing a central role.
• Immigration Policies: Tightened H-1B visa restrictions during Trump’s tenure affected Indian IT professionals, impacting workforce mobility and U.S.-India trade relations.

Potential Downsides of Trump’s Re-election for India-U.S. Relations

• Higher Tariffs on Imports: Trump’s proposal to impose a 20% tariff on all imports, including a 200% duty on automobiles, could increase trade tensions, impacting Indian exports to the U.S., especially in sectors like textiles and pharmaceuticals.
• Volatile Trade Relations: Trump’s aggressive negotiation tactics and unpredictable tariff changes could lead to instability in India’s export strategy, complicating bilateral trade.
• Deficit Expansion Concerns: Trump’s plans to cut taxes amid an already high U.S. budget deficit could trigger global bond market volatility, affecting emerging markets like India.
• Impact on Federal Reserve Rate Policies: Trump’s policies could influence the Fed’s approach to rate adjustments, which might limit the Reserve Bank of India’s flexibility in monetary policy.
• Cryptocurrency Dynamics: Trump’s favorable stance toward Bitcoin could increase its market volatility, potentially impacting financial stability.
• Space Sector Competition: Trump’s preference for U.S. space technology could lead to competitive pressures on India’s satellite and space programs, especially with private companies like SpaceX pushing for favorable U.S. regulations.
• South Asia Relations: Trump’s strong stance against Pakistan and Bangladesh could limit India’s ability to engage in regional diplomacy, as a reduced U.S. role could weaken mediation opportunities.
• China Tensions and Tariffs: Trump’s high tariffs on Chinese imports may prompt China to boost domestic spending, potentially making India a less appealing market for foreign investment.

Potential Positives of Trump’s Re-election for India-U.S. Relations

• Renewed Free Trade Agreement Talks: Trump’s interest in reviving Free Trade Agreement (FTA) talks with India could lead to increased trade volumes and enhance technology transfers.
• Access to Advanced Military Technology: Trump’s support for providing military technology to India aligns with India’s modernization goals, potentially reducing bureaucratic hurdles.
• Reduced Human Rights Scrutiny: Trump’s administration may apply less pressure on India regarding human rights and democracy, allowing India greater diplomatic flexibility.
• Action Against Separatist Movements: Trump’s stance on the Khalistan movement aligns with India’s interests, particularly given his unfavorable relationship with Canada’s Trudeau government.
• Dollar Weakness and Forex Volatility: Increased U.S. trade deficits could weaken the dollar, which could benefit Indian exporters, although it may present forex challenges.
• Green Card Reform for International Students: Trump’s proposal for automatic green cards for international students aligns well with India’s interests, benefiting Indian students pursuing careers in the U.S.
• Focus on Skilled Immigration: Trump’s immigration policies may favor skilled workers, aligning with India’s strengths in IT and engineering.
• Corporate Tax Cuts: Trump’s proposed corporate tax cuts could increase demand for outsourced services from India, benefiting sectors like IT and engineering.

Way Forward

• Deepening Economic and Defense Partnerships: Leveraging Trump’s openness to defense and energy cooperation, India can deepen bilateral economic and military ties.
• Boosting Domestic Demand and Market Diversification: Strengthening domestic demand and diversifying trade partners will help India reduce reliance on U.S. trade and manage potential tariff impacts.
• Careful Monetary Policy: The RBI should navigate its rate cuts carefully, taking into account global volatility driven by U.S. policies to maintain financial stability.
• Educational and Immigration Collaboration: Strengthening educational and tech partnerships with the U.S. could create a skilled workforce pipeline, supporting India’s IT and engineering sectors.
• Enhancing Regional Influence: With a potentially reduced U.S. focus on South Asia, India could expand its influence among neighboring countries, using development programs to support regional stability and development.