Thursday, January 12, 2017

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What can India  expect from President Trump?

First let's talk about BAD THINGS !!

India is the fastest growing source of illegal immigrants in the US (the number rose 43 percent between 2009 and 2014) and ranks fourth on the list of the largest sources of illegal immigrants after Mexico, El Salvador and Guatemala.
  • There are currently around half a million illegal Indian immigrants in the US and Trump wants the host country to accept the people his administration would deport. This can have a severe negative impact on India.
  • It is not just illegal immigrants that Trump is targeting. He would like to make legal immigration into the country more difficult as well, according to a report by Vox.
  • Remittances from the US is an important source of foreign exchange for India. The US is currently second only to Saudi Arabia as the biggest source of foreign inward remittances. Remittances also make up to 4 percent of our GDP. This will be dented if migration from India to the US reduces significantly.

(Photo: BloombergQuint)

India’s BPO industry could also bear the brunt of Trump’s strong anti-outsourcing stance. He has proposed a 15 percent tax on American companies outsourcing their work.

Another worrying aspect of a Trump Presidency is the possible weakening of global trade. He has proposed, at various times, differing tariff structures on imports coming into America. For instance, he has proposed a 35 percent tax on automobile imports from Mexico.

(Photo: BloombergQuint) 
  • The US is an extremely important partner in trade for India. Indian exports to the US stood at $44.8 billion in 2015 while imports from the US was close to $21.4 billion. 
  • A tariff of the kind Trump proposes will end up hurting India’s export-based domestic industries.


 TRUMP can turn out to be GOOD for India ...Reasons we shouldnt worry ...A Different take !

Image result for trump and india

#1: Outsourcing.
  • Trump has talked about bringing back jobs, and one sector where India has been taking away jobs from America is software services.
  • But Indian IT is already in the throes of a major shift, with automation and not labour arbitrage becoming key to growth. This means Indian IT was anyway going to reduce hiring of lower-level competencies.
  • Under Obama, Indian IT has weathered a steep hike in H1B visa fees. Under Trump, India IT may have to create more jobs onshore in America, hiring a lot locally. 
  • Once the Indian majors get the optics of local hiring right, IT will grow again. Trump, moreover, is going to emphasise tech even more, having indicated more investments in areas like cyber security. This is going to increase demand for IT manpower, not reduce it. India will benefit ultimately.

#2: Pharma diatribe.
  • Trump said “we’ve got to get our drug industry back. Our drug industry has been disastrous. They’re leaving left and right. They supply our drugs, but they don’t make them here, to a large extent. And the other thing we have to do is create new bidding procedures for the drug industry because they’re getting away with murder. Pharma has a lot of lobbies and a lot of lobbyists and a lot of power and there’s very little bidding on drugs. We’re the largest buyer of drugs in the world and yet we don’t bid properly and we’re going to start bidding and we’re going to save billions of dollars over a period of time.”
Taking the statement as a whole, it seems that Trump may emphasise bringing down drug prices rather than merely focus on bringing back pharma manufacture back to the US. He is committed to dumping Obamacare, the costly medical insurance scheme. 
  • This means he has to focus on lowering drug costs, and this means he has to tame the pharma lobby – which is what he hinted at. 
  • Obtaining drugs for medicare will be subject to bidding pressures to bring down prices, and in this scenario, generics will have a larger role to play. 
  • Can India, one of the world’s biggest sources of generics, be left out of this process?

 #3: Defence. 
  • Trump talked about bringing down defence production costs, against through more effective bidding procedures. 
  • While this will limit the US defence industry’s ability to gouge profits out of defence budgets, the resultant cost cuts can also benefit India as we become one of the major defence equipment markets for American companies. 
  • This will improve our leverage with a Trump administration, since we will be buying American goods and creating local jobs. And we could also be manufacturing in India some of the components of defence equipment as part of set-offs.
#4: Geopolitics.
  • Trump’s softer approach to Russia is good news for India’s own efforts to contain China. 
  • The Obama administration’s sanctions against Russia and Vladimir Putin for the latter’s aggressive policies towards former Soviet republics has pushed this traditional Indian ally closer into the Dragon’s embrace. 
  • If Trump reverses this at least partially, it will drive a wedge between Russia and China, improving India’s geopolitical options in Asia. 
  • And, if additionally, Trump gets tougher on China, India’s choices for strategic alignments improve.
As for Pakistan, no US administration can afford to reduce it to a complete pariah as India would like, but Trump is unlikely to give it as much of a free pass on Islamist terrorism as Obama had given it. India should not be unhappy with this shift in emphasis, even though deterring Pakistan will remain our job.

#5: US revival and growth. 
  • Trump did not talk much about his plans for stimulating the US economy, but there is talk of a $1 trillion investment in public infrastructure, which cannot but increase demand for imports from the rest of the globe. 
  • The shift of stimulus from monetary to fiscal policy is good for the world, as it will boost demand. The Fed’s zero-interest rate policy helped Wall Street more than the Main Street, as speculators made billions. The shift to fiscal stimulus may mean higher inflation, but it will get the US economy moving faster. There is only so much cheap money can do. 
  • For much of the last decade, China was the world’s main growth engine; 2017 could see the US taking over. That is good for everybody, including India

How must INDIA deal with TRUMP ! ( Out of the Box Ideas ! Related image

  • India should formulate a totally pragmatic approach for dealing with Trump. This would be different than the typical ideological approaches Indians have tended to use in international affairs. In other words, do not pigeon hole Trump into Left/Right categories. Understand his top priorities as president, and make concrete deals that are free of lofty ideologies.
# On BHALUCHISTAN / Pakistan
  • India’s most important diplomatic offensive should be on Baluchistan. Convince Trump that a game changer would be to free Baluchistan from Pakistan by supporting the Baluchi freedom movement. This will involve US military intervention. And it will change the map of the region forever. 
  • Afghanistan will get access to the sea via Baluchistan, and the US will no longer have to suck up to Pakistan for supplying its troops. Afghans will love this freedom from the Pakis. 
  • So will the other Central Asian “stan” countries that are presently landlocked. A potential new sea access for Russia will also be a negotiating card to deal with Putin. Pakistan will lose its geostrategic positioning, a card it has played very skillfully for too long.
  • For its part, India should offer military help in Afghanistan, but only if USA guarantee’s an independent Baluchistan. This will be a win-win deal of a kind that is right up Trump’s alley. Russia may decide to join. A clandestine or indirect role for Israel should also be discussed. As a side benefit, this might also open a new door in negotiating with Iran, given its strategic interests concerning Baluchistan.
# Diplomatic Officials 
  •  Senior Indian military officials should lead strategic discussions with Trump.  
  • India should avoid sending the standard team of Indian diplomats because Americans appreciate clear-cut, no-nonsense dealmakers rather than woolly-headed poets or ideologues. 
  • This pragmatism will be even more applicable in dealing with Trump. 
  • India should also consider appointing some ex-military person as its ambassador to the USA. This US relationship should be a top priority for Ajit Doval.
# On H1B visas
  • Issues like H1B visa are important, no doubt. 
  • But corporate India and corporate America are already closely aligned on this. 
  • Trump will listen to corporate America. That is a good channel to use. 
# On International institutions
  •  The US’ trade deficit with India is nowhere close to the deficit with China ($23 billion as against $367 billion in 2015). 
  • Given the fact that Trump will most likely flout WTO rules and try to apply selective trade barriers, India should seize any opportunity to strike good trade deals with the US.
  • India should also expect Trump to significantly shake up the status quo in established global institutions and should take advantage of such a situation.
  • Maybe Trump will disrupt the G20/G7, the NSG, the UNSC, climate change agreements, etc. The onus would be on New Delhi to bargain for a more favourable position in these international institutions.


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