Trump’s Inauguration and the U.S.-India Relationship: A Path Forward

President Donald J. Trump and India’s Prime Minister Narendra Modi, participate in a bilateral meeting Tuesday, September 24, 2019, at the United Nations Headquarters in New York City. / Official White House Photo

We are days away from Donald J. Trump being sworn in as U.S. president for a historic second time on January 20, 2025.

On the one hand, there is familiarity with President Trump, having seen him in his first term in the Oval Office. There is also curiosity about how the tea leaves will pan out during Trump 2.0, given that unpredictability is the only constant factor as we look ahead.

As Trump assumes office again, the world is in flux, with twin wars raging in Eastern Europe and West Asia, a supply chain bottleneck, rising temperatures, and an inflationary economy. The new Trump administration faces new opportunities and presents us with new challenges.

Recalibrating ties

The U.S.-India relationship, however, remains a cornerstone of global geopolitics. Since the time of President Clinton, each president has worked on building relationships across all facets, from shared interests in trade, commercial relations, security, and technology. Trump's second term offers a chance to recalibrate this vital relationship, with trade, immigration, the Indo-Pacific, and manufacturing emerging as focal points.

Trade will remain a critical, albeit contentious, component of the US-India relationship under Trump 2.0. 

President Trump's first term was marked by friction over tariffs and trade imbalances, with both nations imposing duties on each other's goods. High-profile disputes, such as India's tariffs on Harley-Davidson motorcycles and steel and aluminium tariffs, removing India from the benefits of the Generalized System of Preferences (GSP), put trade ties in limbo. Trade talks picked up in 2021 with the Trade Policy Forum (TPF) resumption.

Market access

India is close to being a $4 trillion economy and, with the largest consumer base, offers vast opportunities for American businesses. Washington could work towards building trade dialogue addressing key issues such as tariffs on agricultural products, digital services taxes, and intellectual property protections. New Delhi will focus on securing greater market access for its goods and strong IT services exports while addressing U.S. concerns over regulatory hurdles.

Speaking of IT exports, one of the key issues for Indian IT giants is the H-1B visa. The tightening of H-1B visa rules and debates on the way forward on high-skilled immigration has caused a rift between the MAGA right and the libertarian right. Skilled Indian workers, often the backbone of America's technological innovation, continue to face significant immigration hurdles under stricter immigration norms.

Finetune immigration

It has not just disproportionately affected Indian IT professionals, a critical Silicon Valley talent pool dependent on this high-skilled visa. It is vital for several other American industries and the American economy to remain competitive in a great power competition with China. 

In his second term, Trump has the opportunity to refine immigration policies to ensure they align with economic needs. Simplifying bureaucratic backlogs and visa pathways for skilled workers, paired with mechanisms for retaining global talent, will benefit both nations. For India, this would reaffirm the value of its professionals on the world stage, while the U.S. could maintain its competitive edge in sectors such as technology and healthcare.

Quad, China

Regarding security, the Indo-Pacific continues to be a theatre of convergence for U.S.-India strategic interests. The Quad continues to remain a cornerstone of the Indo-Pacific strategy. The $35-trillion economy of four democracies has prioritized tackling global challenges, including health security, climate change, rebuilding and rejigging secure supply chains, and developing critical technologies.

The Quad has gained renewed significance with China's growing assertiveness in the South China Sea and along India's northern borders. During Trump's first term, defense ties deepened with landmark agreements like BECA (Basic Exchange and Cooperation Agreement) and COMCASA (Communications Compatibility and Security Agreement).

Tech sharing

Trump's second term should build on this momentum. The U.S.-India defense partnership has seen remarkable progress this past year. Joint military exercises, enhanced maritime patrols, and intelligence sharing will be key to countering Beijing's influence. Additionally, expanding defense trade and technology transfers can cement India's role as a cornerstone of Washington's regional security strategy. The U.S. can reinforce a rules-based order in the Indo-Pacific by strengthening India's capabilities.

China's assertive policies, from its Belt and Road Initiative to aggressive posturing in the Himalayas and in the South China Sea, remain a shared challenge for democratic nations in the Indo-Pacific.

During his first term, Trump's confrontational stance toward Beijing aligned with India's security concerns, particularly after the 2020 Galwan Valley clashes. 

In Trump's second term, the US-India partnership must focus on reducing economic dependencies on China through a China plus one strategy and building up a manufacturing economy. 

India's agenda

With the 2025 Budget around the corner, New Delhi must implement reforms to improve the ease of doing business environment, attract more American investments, and foster mutual growth.

The key challenge is balancing Trump's "America First" agenda with New Delhi's "Make in India" initiative, as both prioritize domestic manufacturing. However, collaboration over confrontation is the need of the hour. India's vast labor force and growing industrial base can complement American technological expertise and capital investment.

American corporations have shown increasing interest in India's manufacturing sector, particularly in electronics and pharmaceuticals. The focus is on semiconductor manufacturing facilities with the country's establishment of semiconductor fabrication facilities.

With the U.S.-India Initiative on Critical and Emerging Technology (iCET), innovation in semiconductors, quantum computing, and advanced telecommunications reflects supply chain security with national security.

Major American companies have invested significantly in India in smartphone manufacturing, autonomous vehicle factories, and chip design.
Policies encouraging technology transfers and joint ventures could further enhance this collaboration. Addressing longstanding issues such as bureaucratic inefficiency, labor rigidity, and infrastructure gaps is essential for India to realize its manufacturing potential.

Looking ahead, Trump's second term marks a pivotal moment for U.S.-India relations. Despite challenges, the foundations for a strengthened partnership are firmly in place. The road ahead will have challenges related to trade imbalances, immigration reforms, and security collaborations. However, the shared commitment to democracy, economic growth, and regional stability provides a strong basis for progress.

As Trump begins his second term, Washington and New Delhi should take a pragmatic approach that balances economic priorities with strategic imperatives.

 

(The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of New India Abroad.)