Impact of change in US government on India

Impact of change in US government on India

Jun 16, 2021, 11:26:59 AM News

The present essence and origins of Indo-US relations can be traced to the immediate era following the Cold War (the early 1990s). In addition, India and the US have been brought together by strategic political consideration, while economic issues such as access to investment, technology, and the economy have all too clearly led to such commitments. There were some disagreements along the way, for example, India’s nuclear test in 1998, some trade conflicts, disagreement over CTBT, and the newly formed WTO mechanism. Agreements like Strategic Partnership Agreement (2004) and the Indo-US nuclear deal in 2008 have had a huge effect on India’s relations with the US since it was for the first time that engagements in a formal way were taking place in strategic areas. Several agreements and treaties happened over the period some of them are Logistics Exchange Memorandum Agreement (LEMOA) in 2016 and the Indo-US Defence Agreement in October 2020. To a large extent, the presidency of Barack Obama was instrumental for India-US relations to move into the next level of relations with its focus on issues including cultural change, climate change, terrorist activities, the world economy, and the market access. 

Biden and India 

Joseph Robinette Biden Jr. was elected president of the USA in November 2020. He defeated current President Donald Trump and will be inaugurated as the 46th president on January 20, 2021. Joe Biden promised to take certain actions towards the current policies and after taking necessary actions towards the policies of the prior president, and India will also face some of the repercussions of those actions. Following are some expected actions to be done by the US due to the change in government –  

  •  IT companies 

Biden stated against section 230 and said it should be revoked. Biden stated that Section 230 of the Communications Decency Act, is a significant piece of legislation that protects internet platforms from civil and criminal responsibility for content created and posted by users. It also enables those platforms to create intense content on their platform which can be very violent and encourages criminal activity. Twitter and Facebook were major factors in the 2016 elections and Biden aims to not give them such power. Biden promised to raise the corporate taxes to 28% from 21%, Big tech companies can be faced with scrutiny and greater tax oversight. Rolling back of section 230 could make it harder for online platforms to operate and offer services. And since the US is a hub of most of the technological affairs, all of this could result in some problems for the Indian IT industry as well. 

  • Renewable energy 

Biden’s one of the first calls for action would be to again make the US a part of the Paris agreement. And with that a call for the uplifting of the environment. He aimed a ₹10000 crore climate plan envisioning a massive shift to cleaner and safer sources of energy, aiming to build a Clean Revolution. And with the USA being the epicentre of developed nations, it planned on making other countries a part of it as well. India should expect some new changes in policies or an uprising in the market for renewable energy. 

  • India Pharmaceutical industry 

Since the start of this global pandemic, Indian global exports of medicinal services have grown by 11% in the first quarter and 19% in the second quarter. In the same period of time, the amount of Pharma exports to the US has also increased by 15%. India has played a critical role in providing the US with effective, reliable, high-quality, and more affordable drugs. The role of Indian healthcare companies will become more significant after the victory of Joe Biden provided that there will be an increased push for generic prescription drugs and access to affordable health insurance. It is important to analyse the impact of Biden’s proposed healthcare policy on the Indian pharmaceutical industry because close to 40% of generics valued at about ₹40000 crores consumed in the US are imported from India. By giving Americans more options, reducing healthcare prices, and making our healthcare less difficult to manage, his campaign vowed to expand on the Affordable Care Act (ACA). 

  • India and Iran 

President Trump’s administration constructed an aggressive foreign policy, by which strict sanctions were put against Iran and Venezuela’s crude oil distribution, which created problems for the Indian oil industry. The sanctions on Iran and Venezuela had blocked up 3% of the world’s oil supply, which is about 3 million barrels per day. But now Joe Biden’s win can lead to a resumption of crude oil from Iran to India, which would eventually reduce the oil prices in India. India is the third-biggest importer and user of oil in the world and needs its oil imports to be diversified in order to buy cheaper oil to slash its import bill and save foreign exchange. 

  •  Trade 

The US is one of those rare countries with which India exports more goods than we import from them. The United States has established an accelerated trade relationship with India. In 2019, overall U.S.-India bilateral trade in goods and services reached ₹1000 crore. In 2019-20, India exported goods worth ₹40 Lakh crore to the US — that’s roughly 17% of all Indian exports that year — and imported goods worth ₹ 2 Lakh crore in return — that’s roughly 7.5% of all Indian imports. Energy exports are a major area of growth in the trade relationship between these 2 countries. Trade is likely to roll in more consistent policies but the alleviation of trade tensions could put an impact on the Indian beneficiaries for example chemicals, manufacturing, and agriculture. But Biden’s presence could also start the trade between China and the US, which would affect the trade factors of India. 

  • H1-B Visa 

President Biden plans to increase the number of H1-B visas, and also cancel the limit on visas by India. Which would benefit a lot of professionals which were impacted by the restrictions. Easy green cards were one of the first promises by him to strengthen the US-India relations. 

  • Investment 

India’s 5th biggest source of FDI is the United States. 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) and Foreign Institutional Investor (FII) into India. FPI data indicates that total assets under custody were ₹33.22 lakh crore as of September 2020, and ₹11.21 lakh crore of this amount was accounted for by the US. On trade, Biden is likely to be better than the current Trump administration. 

  • Kashmir 

Biden’s campaign website touched on the internal issues of India. And it states that the “Indian government should take necessary steps to restore rights for all the people of Kashmir”. The democrats also stated that the US government should speak out boldly in support of the international humanitarian life and support of the UN-backed peace resolution. Hence, Biden is expected to push forward the pressure over India to resolve the issue in Kashmir. 

  • Military help 

Biden said in the Times interview, The US and India will stand together against terrorism in all forms and work together to promote a region of peace and stability where neither China nor any other country will threaten its neighbour. India and the US deal on the supply of weapons according to which India can buy more advanced and sensitive technologies from America. With this deal, India and the US have become better strategic partners. And this will help India with all the border security from China and Pakistan. 

Together with Covid infection control and economic recovery, the US could again provide the global economy with a growth  impulse that countries like India need to improve their exports and expand. The Biden administration aims to have India and the US as natural allies. Biden pushed to remove the sanctions on India after the Pokhran nuclear test of 1998. He also convinced the Senate to retain curbs in Pakistan. Which involuntarily helped India with the border cease firing and runoffs. The past presidents of US Richard Nixon, Ronald Regen’s policies and decisions also favoured Pakistan and with the Democrats’ government things can turn into our Favor.  

The market is full of people trying to make it big in the game. And since there is a ton of competition out there you better want yourself to be ahead of others. That is why you should research and read as much as you can. We at insellers, have been doing a lot of research and carrying out project implementations with our clients. We tell you the not so often talked about inspiring reverie to real stories of SMEs and startups, to inspire the Entrepreneur in you. Check out our website for more amazing blogs like this 


Published by shivank shrivastava

Comment here...

Login / Sign up for adding comments.