Trump is IN, Normalcy is OUT: India Braces for the T Factor

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As Donald Trump assumed office as the 47th President of the United States late Monday night, Indian policymakers and business leaders began bracing for potential shifts in trade and immigration policies. These changes, expected to bring both challenges and opportunities, could significantly impact the next phase of US-India relations.

The inauguration ceremony, held amid freezing temperatures in Washington D.C., seemed a fitting metaphor for what lies ahead. Many economists, political experts, and corporate leaders anticipate Trump’s second term to be marked by initial chaos and uncertainty.

“Disruption will be the new normal. Trump will be disruptive. He has no intention of following the rules of the game. He will try to violate WTO rules even more, and this could set off a domino effect, with other countries following suit. India will be targeted. There are already indications, but how far he goes remains to be seen,” said Biswajit Dhar, Distinguished Professor at the Council for Social Development, speaking to businessline.

  • Also read: Here’s what we know about Trump’s planned executive orders after swearing-in
Tariff threats

Trump has repeatedly warned trade partners, including India and China, of increased tariffs. His threats of reciprocal tariffs have left New Delhi concerned, given the US is India’s largest export market. This looming uncertainty over a potential trade war has kept many Indian business leaders on edge.

“The one factor that could disproportionately influence the course of the year is the T factor—The Trump Factor. This holds the potential to reshape geopolitical dynamics, with profound implications for the global economy and business,” said Kumar Mangalam Birla, Chairman of the Aditya Birla Group, which has invested nearly $15 billion in the US, including a $4 billion greenfield expansion currently underway.

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Adding to the concerns is Trump’s stance on tightening immigration laws. According to a Pew Research report, Indians constitute the third-largest group of illegal immigrants in the US, making this another potential area of friction for India.

Globally, discomfort with Trump’s presidency is evident, even among long-standing US allies. UK Prime Minister Keir Starmer, Germany’s Chancellor Olaf Scholz, and France’s President Emmanuel Macron were notably absent from Trump’s swearing-in ceremony. At the World Economic Forum in Davos, Trump emerged as one of the most-discussed topics, second only to climate change.

“Trump is a magnetic force that does not escape Davos. The forum will focus on one thing—Donald Trump as President of the United States and what it means for the world,” said Marc Benioff, CEO of Salesforce, as quoted by The New York Times.

Anti-China stance

However, some in India believe Trump’s anti-China stance could work in the country’s favour over the long term. Sachchidanand Shukla, Group Chief Economist at Larsen & Toubro, said that traditional sectors like manufacturing could benefit.

“Given that he has promised to raise tariffs against China far higher than before, it could help India’s manufacturing and PLI-linked sectors. If India doubles down on reforms, particularly in ease of doing business, labour processes, and other areas, it could become a significant beneficiary of Trump 2.0,” Shukla noted.

India’s tech sector might also gain as the US ramps up its focus on innovation in AI, quantum computing, and other transformative technologies. “India’s globally recognised STEM talent pool is ready to play a pivotal role in driving progress and creating value for both nations,” said a senior official from the Hyderabad Software Enterprises Association.

IT sector analyst Pareekh Jain, Founder of Pareekh Consulting & EIIR Trend, pointed out that Trump’s presidency could be favourable for corporate America, which would indirectly benefit Indian IT firms. However, he flagged two key risks: the H-1B visa issue and tariff policies.

“H-1B visa dependency has reduced compared to the past, so the risk is smaller. But Trump’s tariff policies could impact the Indian IT industry, depending on their shape and form,” Jain explained.

As Trump’s second term begins, India is preparing for what could be a tumultuous yet potentially transformative era in its relationship with the United States.

( With inputs from Amiti Sen, Janaki Krishnan, K V Kurmanath and Sanjana B)



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