America under Trump can be the first to reap the benefits of major flagship schemes including Make in India and tap the booming consumer market of world's sixth largest economy that is aspiring to grow 8-10 per cent annually in the coming years.
New Delhi: Donald Trump's rise to the post of United States President is marked by a wave of nationalism or rather protectionist nationalism is sending negative vibes across the world.
India, one of the "bright" stars in global economy and a key ally of the US, has reasons to worry given the fact that Trump's "America First" stance may clash with Narendra Modi's "Make in India" especially in hitech industries like defence as well as the booming services sector like the IT.
Will the ongoing "global strategic partnership" between US and India be reviewed? That's the Big Question before Modi.
In many cases, the Trump regime will move away from the earlier Obama administration's promises. But the core strategic partnership will continue as Trump and Modi share some common ideologies especially on combating terrorism and tax evasion.
In the past few months, global markets have been roiled and investors are moving to safer haven assets as many countries are contemplating a diktat that will weaken bilateral or even multilateral ties under the Trump regime.
Already, experts have flagged chances that global growth prospects may be dampened, slow trade and investment flows, and weaken emerging market currencies.
Indeed, Trump is walking the talk. One of the first thing that Trump did was to start with withdrawal from the 12-nation Trans-Pacific Partnership (TPP) trade pact and start the process of renegotiating the North American Free Trade Agreement (NAFTA), which was signed in 1994 by the United States, Canada and Mexico.
A White House statement issued soon after Trump's inauguration said the United States would also "crack down on those nations that violate trade agreements and harm American workers in the process."
All of these are part of new regime's trade strategy to protect American jobs and boost domestic growth--Trump targets to lift US growth to 4 per cent. Fortunately, none of these will come in the way of a stronger US-India tie.
What's at Stake for India?
After taking over as PM, Modi has visited four times to cement ties with the world's largest economy and woo global investors.
During 2014 and 2015, Modi visited US for United Nations General Assembly and have had separate meetings with Obama and top officials of the government and corporates.
In 2016, Modi visited US twice—first for the Nuclear Security Summit and then for a state visit when he addressed the US Congress.
The two countries are engaged in a strategic partnership that ranges from cooperation in defence, trade, investment and combating terrorism to climate change.
According to the Ministry of External Affairs, there are more than 50 bilateral dialogue mechanisms between the two governments. At the first meeting of the Strategic and Commercial Dialogue at the level of EAM and MoS (Commerce & Industry) was held in Washington on September 2015, India and US have added a commercial component to the five traditional pillars of bilateral relations on which the erstwhile Strategic Dialogue has focused, namely: Strategic Cooperation; Energy and Climate Change, Education and Development; Economy, Trade and Agriculture; Science and Technology; and Health and Innovation.
In addition, there are Ministerial-level dialogues involving home (Homeland Security Dialogue), finance (Financial and Economic Partnership), commerce (Trade Policy Forum), HRD (Higher Education Dialogue), Science & Technology (Joint Commission Meeting on S&T) and energy (Energy Dialogue).
Apart from trade and some economic issues like outsourcing, it is unlikely Trump will go back on the path traversed by Obama and Modi.
The seriousness of two governments to take the ties forward can be judged from the fact that outgoing President Barack Obama called Modi on phone on January 19, to review the progress of the strategic partnership between the world two largest democracies.
The two leaders reviewed with satisfaction the significant all round progress and cooperation in ties between India and the US in the past few years. "Prime Minister thanked President Obama for his strong support and contribution to strengthening the strategic partnership between India and the US," the PMO said.
Modi aims to take forward the strategic cooperation under the new dispensation as well.
Soon after the US presidential poll results were out on November 9, Modi congratulated Republican Donald Trump for winning the presidential election and hopes to work closely to take India-US ties to a "new height". "We appreciate the friendship you have articulated towards India during your campaign. We look forward to working with you closely to take India-US bilateral ties to a new height."
Even during Trump dispensation, India will continue to invite US companies to be part of Make in India, Digital India and other flagship schemes.
Why India matters for Trump?
US-India ties have indeed seen a golden era in the last decade--both under former UPA and the current NDA regimes.
India's exports to the US have jumped from $17.35 billion in FY06 to $40.34 billion in FY16 while imports from US have surged from $9.45 billion to $21.78 billion in the same period. The US is currently the top export market for India and ranks second in the import list.
The US is also one of the top investors to India--FDI flow from US was $19.38 billion until September 2016. If one considers the indirect flows especially FPI and FII flows through tax havens like Mauritius, the US investment figures will be much higher.
What can be impacted somewhat is software exports from IT/BPM firms to the US. Nasscom data shows Indian firms exported software and services worth $68.2 billion or 62 per cent of the total $110 billion IT services to the US.
A tighter rule, which is being contemplated will hurt the flow of Indian techies to the US and may hurt revenues.
As the rudimentary data suggest, India offers huge potential for US firms in terms of trade and investment.
As India has opened up almost all the sectors, America under Trump can be the "first" to reap the benefits of major flagship schemes including Make in India and tap the booming consumer market of world's sixth largest economy that is aspiring to grow 8-10 per cent annually in the coming years.