Statsguru: What Donald Trump's return to the White House means for India

It is too early to gauge the likely impact of Donald Trump's “America First” campaign, but it is time to assess economic engagement between India and the US during his first term and the current Joe Biden administration.  

 

The US gross domestic product grew 2.5-3 per cent annually under Trump’s first presidency. However, the last year of his tenure was affected by Covid-19 pandemic. Biden’s era wasn’t very different, as the economy expanded annually by 2.5-2.9 per cent (chart 1). 

 

In terms of trade, India has enjoyed a surplus with the largest economy in the world (chart 2).  

 

 The Indian rupee depreciated sharply against the dollar, often showing a connection with high US growth rates. It depreciated 13.8 per cent during Trump’s term and 12.9 per cent during the Biden administration (till October end), shows chart 3. 

 

During the Trump administration, US foreign direct investment (FDI) flow into India in 2020-21 (FY21) surged, making the US the second-largest contributor to the total FDI equity, up from fourth place in previous years. During the Biden administration, the US rank first slipped to third and then to fourth in the first quarter of FY25 (chart 4). 

 

The US maintained its top ranking in terms of assets under the custody of foreign portfolio investors during both administrations (chart 5).    India has maintained the top position in terms of the number of H-1B visas issued to its citizens under both the Trump and the Biden administrations (chart 6).