Trump 2.0: India's FDI Landscape on the Cusp of Change

State Bank of India's report suggests that a second term for Donald Trump could alter India's FDI trends. While regulatory challenges are expected, India's diversification into new sectors may buffer against potential declines. Despite looming hurdles, opportunities for enhancing trade ties with the U.S. remain strong.

India could witness a transformation in foreign direct investment (FDI) dynamics if Donald Trump secures a second term as U.S. President, according to a State Bank of India report. The report cites the regulatory changes under Trump 1.0 that aimed to direct investments back to the U.S., impacting global FDI, including in India.

While similar policy moves could present challenges for emerging markets like India, which heavily rely on FDI for economic growth, the country has been moving away from traditional FDI sources. This diversification across various sectors, such as renewable energy and medical devices, might mitigate any potential negative impacts.

Additionally, the report outlines a dual scenario where Trump 2.0 could pose both hurdles and avenues for growth. Short-term issues like higher U.S. tariffs and strict visa rules could cause volatility, but in the long run, India might expand manufacturing, diversify exports, and bolster self-reliance, ensuring resilience in trade relations with the U.S.

(With inputs from agencies.)