US Election 2024: Impact of Donald Trump's second term on India - Decoded

US presidential election in 2024 holds significant implications for India's ecomy, tre, and stock markets. With US being India’s largest tring partner and key investor, policies of eir Donald Trump or Kamala Harris could shape bilateral relationship in vital areas like defence, tre, and techlogy. 

Here's what a Trump or Harris victory could mean for India.

If Donald Trump Wins

A second Trump presidency could bring substantial changes to ecomic scenario, both in US and for its global partners, including India. Trump's policies are expected to be more protectionist, inflationary, and focused on reshoring manufacturing jobs to US, which could have both positive and negative consequences for India.

Defence and Strategic Ties

On defence front, Trump has been a strong vocate for bolstering ties with India. A Trump victory would likely continue India’s strategic relationship with US, including defence deals and collaborations on counterterrorism, regional security, and maritime defence. However, Trump’s focus on “America First” policies could le to less focus on multilateral engments, which might impact global security dynamics.

Tre and Tariffs: Impact on Indian Exports

Trump’s approach to tre has historically been centred around raising tariffs to protect US industries, particularly against China. If Trump returns to office, India’s exports to US could be affected by higher tariffs, especially in sectors like pharmaceuticals, IT services, and manufacturing. Indian generic drug exports to US might face higher import duties, which could hurt pharmaceutical sector. Similarly, a slowdown in US discretionary spending due to tre war could negatively impact Indian IT and service exports, as many Indian companies rely heavily on US market.

Inflation and Commodities: Benefiting Certain Sectors

Trump’s ecomic policies are expected to be inflationary, particularly if tariffs are imposed on Chinese goods and more US jobs are reshored. Inflation tends to benefit commodity-linked sectors, such as metals, oil, and natural resources. This could offer a boost to India's energy and commodity sectors. ditionally, higher US fiscal spending and infrastructure investments could provide opportunities for Indian companies involved in construction, engineering, and raw materials.

Currency and Investment Flows: A Stronger US Dollar

Under Trump, a stronger US dollar could put pressure on global markets and could also reduce Foreign Portfolio Investments (FPI) into India. If interest rates in US remain high, dollar would appreciate, making Indian assets less attractive to international investors. This could reduce capital inflows into Indian stock market, which has alrey been facing pressure from slowing earnings growth.

If Kamala Harris Wins

If Kamala Harris wins 2024 election, focus will likely shift towards maintaining status quo in US policies. Harris has indicated a preference for continuity in domestic and foreign policies, which could provide a stable environment for India to continue its ecomic growth and strategic partnership with US.

Tre and Tariffs: Continuation of Existing Policies

While Harris is unlikely to roll back tariffs imposed during Trump ministration, she may t take a more aggressive stance on protectionism. For India, this means that existing tre barriers, particularly on goods like pharmaceuticals, gems, and IT services, would likely remain unchanged. While some sectors may face tariff pressures, Indian exports to US would continue without drastic changes that a second Trump term could bring.

Global Ecomic Stability: Soft-Landing for India’s Growth

Harris’ policies are expected to favour global stability, with an emphasis on multilateral cooperation rar than confrontation. This could le to more stable ecomic growth for India, particularly in sectors like IT, pharmaceuticals, and services, where US is a key partner. relatively neutral approach to tre and tariffs would help Indian businesses plan for future without uncertainty of escalating tre wars.

Defence and Foreign Policy: Stronger US-India Ties

On defence front, Harris is likely to maintain a strong relationship with India, continuing US’s strategic partnership in Indo-Pacific region. This would include enhanced defence cooperation, joint military exercises, and counterterrorism collaboration. ditionally, Harris’ stance on global security would likely see continued support for Ukraine, NATO, and regional allies, which would bolster India’s own geopolitical standing.