What India Inc. Expects from President Trump and Likely Outcomes from His Visit

Great Expectations? Why India Inc. Might be in for Disappointment from Trump

President Trump is expected to visit India in the last week of February. His visit is widely seen as an endorsement of Prime Minister Modi and his policies and a return gift for hosting the latter last year and for the Howdy Modi event.

Indeed, the Kem Cho Trump event is supposed to be a one of a kind welcome and already the hype and the spin have started in right earnest. While these events might be good for the optics, there is a separate set of items on the agendas of the United States and India as far as businesses are concerned.

The announcement that the Trade Representative of the United States is not coming dampened some hopes for a trade deal.

Nonetheless, India Inc. has expectations and high hopes from this visit as the delegations include many leading business leaders on both sides. Moreover, the IT (Information Technology) industry body, NASSCOM, is lobbying hard with both the Indian Government and the United States government for removing the restrictions on the H1B Visas, the mainstay of those firms that send IT professionals to the US.

What the Indian Information Technology Industry Wants from President Trump?

Let us take a look at what the demands of NASSCOM are as far as the H1B Visas are concerned. The main allegation from President Trump against Indian IT firms are that they are using these visas to send IT professionals at far lower wages than are paid to their counterparts, thereby ensuring a Cost Arbitrage to the parties in the exchange, namely the Indian firms and the US firms who hire such professionals.

Moreover, the other allegation is that the Indian firms and the US counterparts are replacing American workers with Indian workers, since they are available for lower wages as well as a readiness and an eagerness to do work that the Americans won’t do.

Indeed, it is for these reasons that President Trump has tightened the screws on H1B visas and has promised to plug loopholes in the process.

On the other hand, NASSCOM points out that it is mainly leading American firms such as Amazon and Microsoft that are benefiting due to the H1B Visa program and hence, the allegations against the Indian IT firms are misplaced.

Therefore, this item looks like it is going to be a sticking point as far as India Inc. and President Trump are concerned.

Is a Mini Trade Deal on the Cards? Trump and the Art of Attention Seeking

Next, India Inc. expects a Trade Deal or a Mini Trade Deal that would boost bilateral trade between the United States and India.

Indeed, while the H1B visa issue is still simmering, it is in the realm of Trade that the Boiling Point has been reached with both sides eager to maximise their gains.

While India Inc. certainly does not expect a Trade Deal like the one that was reached between the US and China, there are expectations that PM Modi would use his personal relations with Trump and ensure that some sort of deal is reached on trade.

Of course, given Trump’s mercurial nature, it is anybody’s guess as to what shape the Trade Deal would take.

Moreover, there is no indication that the US side wants a trade deal as is evident from the media reporting and coverage so far as far as the upcoming visit is concerned.

On the other hand, President Trump has been very vocal at what he sees as unfair trade practices by India and hence, some fireworks can be expected on this count as well.

However, if the visit is well managed and choreographed to suit the tastes of both the leaders, then one can expect some favourable outcomes.

Some Potential Flashpoints between India Inc. and the US

The larger point about the business and trade relationship between India and the United States is that there is a history of India not bowing to the demands of the US until the 1990s when the economy was liberalised.

Moreover, even now, India stands its ground on most issues that can be seen in the way it is resisting American pressure to open up its retail sector for global firms.

Indeed, another issue that can become a flashpoint between these two sides is the regulatory action against Amazon and Flipkart that the Indian government is pursuing.

Moreover, the recent snub to Jeff Bezos of Amazon when he visited India indicates that tensions inherent in this issue.

Of course, Trump is anything but lenient towards Bezos and hence, the Indian side can very well tick this item off the agenda.

As mentioned earlier, both Trump and Modi are known to like the attention and the media coverage that comes with such visits and hence, if India Inc. panders to their affinities for the same, then one can certainly expect Trump to sing on some deals that are favourable to the former.

Conclusion

Last, while the business and trade negotiations can take place away from the spotlight, it is a reminder to those that one should not be carried away by the hype and spin and instead, focuses on the tangible and intangible gains that can be the outcomes. If the hard work is done in advance, then it would be a win-win. To conclude, expectations are high and it remains to be seen as to how much India Inc. gains from Trump’s visit.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


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