As the U.S. election approaches, investors are watching closely, anticipating the potential economic impacts on global markets, particularly India. According to a report by PhillipCapital, the election results could significantly influence India’s economy, especially if there is a shift in U.S. economic policy.
If Trump wins, Indian IT firms might face challenges due to stricter immigration policies, potentially limiting the workforce’s flexibility. However, many Indian firms have reduced risk by hiring locally and establishing near-shore delivery centers. The auto industry may also experience shifts, with a possible reduction in EV incentives that could impact Indian EV component suppliers. Yet, a pivot toward hybrid vehicles could balance demand over time.
In the energy sector, Trump’s preference for fossil fuels could lower global energy prices, benefiting Indian refiners and opening new opportunities for Indian natural gas utilities. On defense, both Trump and Harris support an Indo-Pacific strategy that positions India as a key counterbalance to China, though with differing approaches. Harris may advocate for defense cooperation, while Trump’s transactional style would focus on arms sales.
Further, Trump’s potential infrastructure spending could increase demand for metals, which would benefit Indian manufacturers. His stance on China could lead to higher tariffs on Chinese goods, opening doors for Indian textiles, electronics, and auto components, and increasing FDI flow into India.
With the November 5 election nearing, the outcome will likely have a broad impact on the Indian economy across sectors, from defense to energy.
