Doing business in a rapidly globalizing and changing economy has never been an easy task- so much so recently, that the word ‘globalizing’ is now in question. From a series of political changes- rather a rebellion, a new trend is visible in the global economy- a trend on the lines of anti-globalization, pro-protectionism, and far away from the ideals of free and liberalized trade. Be it Theresa May’s rise in Britain, following the historic verdict of a Brexit, or the election of Donald Trump, a real estate billionaire whose presidential campaign showed dark overtones of anti-globalization, racism, anti-immigrant policy, it has been proven that the world has now taken one step backwards in the race of liberalization and free trade.
India, China and other emerging markets were seen as bright spots and the engines of global growth until recently, this new anti-free trade dialogue has disrupted much of the excitement. For India, specifically the TRUMP presidency is a catch-22 situation, a tricky one indeed. While on one hand, Trump had made heavy pre-poll promises of better ties with India, and has already shown enthusiasm to work with PM Modi, on the other hand, his strict stance on several issues such as anti-migration policies, bringing jobs back to the US, may hurt Indian industry in the near future.
So, now we can delve into the sector-by-sector challenges of what the Trump Presidency might hold:
Information Technology (ITES)
If there is one sector, which is keenly watching the developments in the US Congress, it has to be the IT Sector. The IT Sector alone employs around 1.4 Million Indians in the United States. Major IT firms such as Infosys, Wipro, HCL have entire units based out of the US. Indian migrants are an important employee base of several MNCs, including Apple, Google, Microsoft and many other Silicon Valley hotshots. The uncertainty on the H1-B Work Visas has made it a worrisome issue for big IT providers who majorly depend on it. The US Congress is currently debating to raise the minimum salary bar from the current $60,000 to $100,000, which will spell trouble for many IT and even non-IT professionals working in the US.
Manufacturing and Outsourcing:
President Elect Trump has taken a very stringent stance on Outsourcing and manufacturing. He claims to be the biggest job creator, and has already successfully managed to bring back jobs from Mexico, with immediate effect, Chrysler and General Motors have already set up their new plants in the US. Similar effects could be seen in the outsourcing-BPO in India- which is a huge employment generator back in India. If this reversal happens, Indian jobs could be widely hit, though it remains to be seen how many firms actually shift their bases.
Agriculture
More import restrictions and an even lesser level playing field for Indian exports and Trump seeks to protect his popular rural vote against the advent of globalization.
Healthcare and Pharmaceutical Sectors
The repealing of Obamacare has been one of Trump’s main focus areas. In his first address to the press, he further clarified that he is going to repeal and replace Obamacare pretty soon- this move is bound to hit the Pharma industry, leading to slower approvals in medicines and new drug patents getting harder to get. Trump also pressed for dominance of local US Pharma companies.
Education:
More stringent norms on visas have already hurt student sentiment, and stricter norms of the H1B Work visas have started to weigh on Indian applicants, which have fallen for the first time in the last 10 years. They are now looking for alternate destinations like Singapore, Germany, etc.
We must understand- this might not be necessarily a zero-sum game. Trump presidency has several pluses for India as Trump has a strong anti-China pitch and is willing to support India on several key issues. The long run outcome though- remains largely unclear, what net effects will the Trump administration have on Indian economy, but in the near future, it is certain that many Indian sectors will bleed and shed some weight due to the strict anti-immigration and domestic production campaign of the President-elect Donald J. Trump.
By Keshav Lohia.