India Inc braces for demand shifts, stiffer immigration policies under Trump

With Donald Trump’s return to the White House, India’s economy faces a period of adjustment as his policies on trade, immigration and economic stability unfold.

Key Indian sectors, mainly IT services, pharmaceuticals, finance and manufacturing, are preparing for shifts in demand, tighter immigration policies and new market opportunities as the US revisits its geopolitical alliances and economic partnerships.

Brokerage firms and analysts have said that the Indian IT sector, which is deeply reliant on the US market, will be on high alert as Trump’s policies reshape immigration rules, trade regulations and market priorities. Known for a strict stance on immigration, Trump’s administration could introduce further restrictions on H-1B visas, increasing costs and potentially limiting access to skilled Indian talent in the US.

Indian IT giants ready

However, India’s IT giants have already adapted to past visa restrictions by enhancing local hiring and establishing near-shore centres in the Americas, Europe and Latin America. This strategic shift may mitigate disruptions, allowing companies to maintain intense service levels and protect margins despite elevated operational costs.

“Trump, in his previous stint, tried to curb the H-1B visa programme. His policies increased H-1B rejection rates, higher H-1B/L-1 visa processing charges and wage inflation for H-1B resources. A similar policy stance can't be ruled out in a second term. That said, Indian IT services players are now more insulated from such anti-immigration policies than in 2016. All players have ramped up local hiring in the US,” brokerage firm JM Financials said in a note to investors.

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China factor

Moreover, Trump’s emphasis on decoupling from China could position India as a favoured partner in the IT and tech sectors, with the potential to capture more US contracts and partnerships. As American companies look to reduce dependence on China, Indian IT firms are set to benefit from the increased outsourcing demand, especially for cost-effective, high-quality services.

India’s financial sector, including banks and Non-Banking Financial Companies (NBFCs), will likely experience significant impacts if Trump’s policies favour a stronger US dollar and higher interest rates. The Reserve Bank of India (RBI) may feel pressured to avoid rate cuts to keep capital within the country, which could affect NBFCs’ growth potential.

While banks may face net interest margin (NIM) compression due to rate holds, larger private banks with diversified portfolios and public sector banks (PSUs) with attractive valuations are expected to navigate these conditions relatively well.

Insurance, pharma sectors

For insurance firms, a delayed rate cut in India could reduce their capacity for growth. Indian insurers, who typically benefit from a lower-rate environment, may need to revise their strategies to maintain market competitiveness and support long-term expansion.

Indian pharmaceutical companies will likely see minimal disruption from Trump’s policy changes as the administration’s focus may remain on easing regulatory burdens for US companies rather than implementing Medicare drug pricing reforms. For Indian generic drug producers, this means greater predictability and market stability, with fewer immediate pressures around pricing.

Trump’s protectionist trade policies, particularly those aimed at China, may offer opportunities for Indian manufacturing and auto ancillary companies. Under a “China+1” strategy, US companies are expected to diversify their supply chains, creating new openings for Indian suppliers. This shift could stimulate demand for Indian-made auto components, particularly for US markets.

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Indian operations in US

“Under Trump, demand for EV components from Indian suppliers will be impacted in the short-term, but this could push for adoption of hybrid vehicles, cushioning the overall impact in the medium-term,” brokerage firm Philips Capital said in a report.

However, rising US interest in localised production may lead some Indian companies to consider establishing manufacturing operations in the US, creating both challenges in initial investment and potential long-term rewards from a closer US presence. “A Trump win and increased tariff on China imports would mean China+1 de-risking can accelerate and may benefit Indian auto ancillary companies in terms of higher exports. However, protectionist policies by Trump might require Indian companies to invest in the US to localise supplies otherwise exported from India,” the note said.

Likely policies in oil, gas sector

Trump’s support for the US oil and gas sector could drive down global oil prices. This development would benefit Indian industries that are reliant on energy imports, such as manufacturing and chemicals. Lower oil prices might also help Indian companies manage input costs more effectively, improving profit margins and competitive positioning.

If Trump’s policies reduce geopolitical tensions in major oil-producing regions, the resulting price stability would further assist India, a major importer of energy resources, in maintaining a predictable cost base for energy-intensive industries.

Indian textiles may benefit

In textiles and tiles, Trump’s protectionist stance may favour Indian exports. Higher tariffs on Chinese goods could lead US buyers to source more products from India, increasing demand for Indian textiles and tile products. This shift could significantly benefit established Indian exporters like tile manufacturers in Morbi, who are already present in the US market and stand ready to capture additional market share.

India’s real estate sector, particularly lower-end housing, could face growth delays due to a possible halt in interest rate cuts. Trump’s stance on immigration could also impact demand for commercial office space, especially for Indian tech companies that operate US-based offices. With fewer visas issued, the demand for US assignments may decline, potentially affecting commercial real estate tied to the IT sector. However, demand for lower-cost residential properties may remain steady as interest rates stabilise.

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India as trade ally

With trade tariffs potentially placing Chinese commodity and chemical exporters at a disadvantage, Indian companies could see a rise in demand. Indian chemical producers, already serving US markets, may find it easier to compete on price and access, enhancing India’s role in global supply chains for essential chemicals and commodities.

Trump’s policies could reshape India’s role as a US trade ally, providing Indian companies with new pathways for growth amid shifting alliances and global supply chain adjustments.

As Indian businesses brace for policy changes, strategic adaptations such as local hiring, pricing adjustments and near-shoring are expected to help them effectively navigate this evolving landscape.