US Elections

Why the US election outcome will make no difference to India

As we write, the final outcome of the US elections is yet to be known. It looks like Biden would eventually make it to the White House as he is just 20 short of the magic figure of 270. But, it is always wiser to wait for the final outcome. The question is something much bigger. How would the outcome of the US elections impact the Indian economy and markets and would it impact; at all?

Will Biden be good for India?

Look at the optimistic reaction of the markets and it looks like Biden would do wonders for India. There are some very cogent arguments. One view is Biden would be more open to concessions on trade, unlike Trump who had withdrawn India’s MFN status. Secondly, it is also expected that, unlike Trump, Biden would not be overly concerned about the burgeoning trade deficit that the US is now running with India with the total trade touching $90 billion annually.

The third argument is that he would stay out of very sensitive decisions like the restrictions on H1-B visas, which has clearly put a lot of IT companies in a spot. The fourth argument is that Biden would try and encourage a bigger role for India in the world table including a permanent seat in the US Security Council. Lastly, going by the enthusiasm shown by the Indian Diaspora based in the US, it looks like many of them have shifted their allegiance from Trump to Biden as an economic torchbearer.

Watch for the China equation

There is another school of belief which contends that Biden has always had a soft corner for China. Therefore, it is very likely that he may adopt a softer stance towards China as compared to Trump. That is something that has also enthused Asian markets for the view is that the global slowdown and the trade war may now end much faster. Like most Democrats, Biden too is likely to lean more towards China and to that extent India cannot even expect the kind of antagonistic approach that was adopted by Trump towards China. Like Hilary and Bill Clinton, Biden also has strong views on the profits made by Indian pharma companies in the US. Also, any rethink on corporate tax cuts will hurt tech spending by US corporate houses. So, all is not hunky dory.

Actually, impact will be limited

In the last 70 years, one thing about American politics and diplomacy has been that it is purely transactional. Indian pharma and IT are seeing better times post COVID, because the US does not really have a choice. They need Indian pharma companies to deliver the vaccines. They need Indian IT to help US corporations adapt their models to the post-COVID efficiency and digital needs. That is all that would matter, irrespective of who becomes president. India should focus just on this mutual interest and deliver it consistently!

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