The upcoming 2024 US Presidential Election is set to have far-reaching consequences for India, influencing key sectors from economics to geopolitics. With the stakes exceptionally high, the Democratic Party’s decision to replace President Joe Biden with Vice President Kamala Harris—an unpopular choice for many—adds complexity to the political landscape.
Simultaneously, former President Donald Trump’s return to the race, amid a cloud of legal challenges, raises questions about the future of American democracy. The results of this election could profoundly shape both national and international affairs.
Economic Implications: A Potential Win for India
A global market research report by Nomura indicates that a Trump victory could present substantial benefits for India. The report emphasizes India’s domestic demand-driven growth model, suggesting that factors such as lower commodity prices and favorable foreign policies could create an advantageous economic environment.
Nomura states, “We see India as a relative beneficiary,” pointing out that regardless of the election outcome, the strong economic and strategic ties between India and the US are unlikely to diminish. The US acknowledges India’s status as a large domestic market, implying that any adverse effects from a slowdown in US economic growth would be minimal.
Supply Chain Shifts and Trade Dynamics
While potential trade and immigration tensions may emerge under a Trump presidency, the ongoing shifts in supply chains are likely to provide India with significant advantages. As companies increasingly seek to de-risk from China, India stands to attract considerable investments due to its vast consumer base, solid manufacturing policies, and commitment to economic reforms.
In 2023, India maintained a merchandise trade surplus of approximately USD 32 billion with the US. This surplus may come under scrutiny if Trump opts to reinstate tariffs or enact punitive measures. While India’s historically high tariffs on certain goods have previously raised concerns, these trade frictions may not overshadow the medium-term benefits arising from supply chain relocations.
Immigration: A Double-Edged Sword
Immigration policies represent another area of concern for India. Indian nationals account for over 72% of the H-1B work visas issued by the US, and any tightening could adversely affect Indian professionals, particularly in the IT sector. Although Trump has predominantly focused on illegal immigration, alterations to legal immigration processes could pose challenges for Indian tech companies.
However, Indian firms have proactively adapted by hiring more domestic talent in the US, which may help mitigate the impact of stricter immigration policies.
Foreign Policy: Strengthening Ties
From a foreign policy perspective, a Trump presidency may offer India a more favorable environment. With less emphasis on human rights and democratic values, India could face fewer conflicts with the US over sensitive issues. Furthermore, Trump’s historically softer stance towards Russia could align well with India’s existing ties to Moscow.
India’s strategic importance as a counterbalance to China is likely to be reinforced under a Trump administration, ensuring that cooperation in defense, security, and economic spheres remains robust.
Shared Interests Endure
Despite the potential challenges, the report underscores that India and the US share deeply rooted economic and strategic interests, which are expected to remain strong irrespective of the election outcome. As the US continues to view India as a vital counterweight to China, India’s large domestic market positions it to withstand any adverse effects from a weaker US economic environment.
Key Areas of Impact
The election results will significantly influence the India-US relationship across several critical areas:
- Bilateral Ties: The nature of the new administration’s policies will be pivotal in determining defense, trade, and strategic relations between the two nations.
- Economic Impact: Bilateral trade remains a cornerstone, with approximately $118 billion worth of goods and services exchanged in FY 2023-24. The new president’s trade policies could either foster collaboration or present new challenges.
- Geopolitics: The US stance on China, Russia, and regional issues will shape India’s strategic decisions, with a tougher US approach toward China potentially benefiting India.
- Indian Americans: The engagement of the Indian diaspora—approximately 4.5 million strong—will be affected by the election outcome, influencing political advocacy and community mobilization.
- Climate and Technology: Collaboration on climate change and technology transfer will depend on the new administration’s priorities, impacting future cooperative efforts.
Perspectives on Leadership
Should Kamala Harris assume the presidency, experts expect a continuation of trade policies established during the Biden administration, focusing on economic resilience and domestic manufacturing. Conversely, Trump is known for his protectionist, “America First” approach, which could strain trade relations.
Political analyst Dr. Chietigj Bajpaee of Chatham House observes that discussions surrounding a Harris administration will center on continuity or change from Biden’s policies. In contrast, Trump’s approach is expected to be more transactional, with a heightened focus on trade imbalances and immigration.
The future of India-US relations will hinge on the next US President’s priorities and perceptions of India’s role in global affairs. Regardless of the election outcome, India is poised to maintain a close partnership with the US, navigating the changing political landscape to foster collaboration. As the importance of this relationship remains clear, New Delhi will continue to align its goals with the priorities of the next administration, ensuring resilience in a volatile global environment.