2020 has been a memorable year for many reasons. But the only thing that made much hype in the media and amongst the world population after the COVID-19 is the 59th quadrennial United States presidential election, held on Tuesday, November 3, 2020.
Among the many emerging world powers keenly following the dramatic 2020 US election, one of them happens to be India. Given the planet’s two largest democracies share strong economic, cultural, and strategic ties, the Trump-Biden contest has generated a lot of interest among Indian policymakers and the general public.
After a long dramatic battle consisting of lots of accusations, the American voters have most likely changed the course of the global economy by choosing Biden over Trump making it one of the fiercest battles in recent times.
The Biden Government is looked upon with much hope from various world communities in the light of not only reduced uncertainties in global trade but also in the fact that Biden understands the need to control the Covid19 pandemic before any sustainable economic recovery can take place — either in the US or elsewhere.
Biden’s approach — in stark contrast to Trump’s — could have a salutary impact on how the US leads the rest out of this tricky phase for the world economy when so many countries are witnessing a strong surge in Covid19 infections.
So, the question comes down to how will the Indian Subcontinent be impacted in terms of economy and International relations with the new leader at the helm of the Superpower, given that Biden manages to seamlessly transition from President-Elect to the 46th President of the US in January 2021?
There are several factors due to which the US economy, relations, health, and the policy choices of its government affect India. Let’s discuss a few.
TRADE
US is one of the big rare countries with whom India enjoys the benefit of trade surplus implying that the goods exported to the US outnumber those that India imports from the same. A recent analysis of CARE Ratings has shown that over the past 20 years, India has always had a trade surplus with the US. This surplus has widened from $5.2 billion in 2001-02 to $17.3 billion in 2019-20. Trade surplus had peaked at USD 21.2 billion in 2017-18 and has moderated to some extent. In 2019-20, India exported goods worth USD 53 billion to the US – that’s roughly 17% of all Indian exports that year and imported goods worth USD 35.7 billion in return – that’s roughly 7.5% of all Indian imports.
Apart from trade in goods, India accounts for nearly 5 percent of the USA’s services imports from the World. In 2019, US imports of services from India were $29.7 billion.
Beyond trade, over the past two decades, the US is the fifth-biggest source for Foreign Direct Investment (FDI) into India. Of the total $476 billion FDI that has come in since April 2000, the US accounted for $30.4 billion — roughly 6.5 percent — directly.
Apart from FDI (or investment in the physical assets inside India), the US also accounts for one-third of all Foreign Portfolio Investments (that is, investment in financial assets) into India. FPI data shows that, as of September 2020, total Assets Under Custody were Rs 33.22 lakh crore, and the US accounted for Rs 11.21 lakh crore of this amount.
On the trade front, the Biden-Harris government is expected to be less stringent than the present Trump administration. While the rules of the game in the Trump administration were that a country had to lose for another to gain, the same seems much less likely for the upcoming government. While it is true the trade is mutually beneficial, the scenario seems much positive for India who seems to recover from the dip from 2018-18.
A push towards a rules-based trading system across the globe in replacement of the present outright ad-hoc strategies is likely to be witnessed during the Biden presidency regime making a move away from the protectionist approach that has been engulfing the world lately.
With the combination of control of Covid19 and the economic recovery, the US is again seen as a leader to provide growth impulse to the global economy that countries such as India need to boost their exports and grow.
H1-B Visa
This is one of the factors where the US directly affects India, and where there are massive policy concerns as well. How a US President looks at the H1-B visa issue, affects the prospects of Indian youth far more than the youth of any other country.
H-1B visa is a non-immigrant visa that allows American companies to employ foreign workers in specialty occupations that require theoretical or technical expertise.
Under the Trump Presidency, there was severe curtailment on the visa regime, owing to the ‘America First’ policy which had impacted India on a large scale. Under Biden, this is likely to change as has been indicated by the President-Elect himself in his Election campaigns. The upcoming government is unlikely to view immigrants and workers from India with Trump-like suspicion.
India’s exclusion from the US’ Generalized System of Preference is also likely to come up for revaluation under the Biden-Harris regime.
International Relations
Under Trump’s rule, India suffered massively from the US sanctions on Iran which limited India’s sourcing of cheap crude oil. Normalization of the relationship between US-Iran (and lifting of sanctions) would be more than helpful for an economy like India which needs a regular supply of cheap oil to grow fast.
The issue of data localization or capping prices of pharma and pharma equipment also the content of having a better chance of getting towards a resolution as the US looks forward to moving away from the fanatic approach of President Trump to the pragmatism of a Biden presidency
On the issue of India-China relations, the world is expecting not extreme but slightly tilted support in the favor of India, as the world Superpower looks back to gain its position in the market by undermining the other.
The President-Elect has also promised to re-join the Paris Climate Accord, which turned out to be a massive backlash for the current President. This step could have a direct impact on a country like India which faces massive challenges on this front, both Technical and Financial.
In conclusion, the upcoming government of Bidden-Harris looks promising to the world, and majorly to India who is largely expecting positive outcomes from this turn of tables owing to the friendly relations that the country has been able to maintain in the past decade along with the emotional quotient the country puts up with Vice President-Elect Mrs. Kamala Harris. With the world already set on a path of economic healing, India looks forward to improvising on its strategies to reap maximum benefits.
REFERENCES
- Indianexpress.com
- Bloombergquint.com
- Tradebrains.in
- Rfi.fr
- Drishtiias.com
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