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   Vol. 16 No. 17
Wednesday February 15, 2017

The Trump Effect: India Walks Softly, Carries Big Stick
The Trump Effect: India

Arvind Subramanian     (New Delhi Exclusive) U.S. President Donald Trump has been causing quite a bit of apprehension in Indian business circles. Captains of industry refer to President Trump pointing an accusatory finger at India and China as a precursor to taking away U.S.’s business.
      One of the first public declarations that India could find it difficult to do business with the U.S. came from India’s Chief Economic Adviser Arvind Subramanian, who mentioned the H-1B Visa and Trump’s desire to do away with it altogether.


Visa Threat

      “My concern,” said Subramanian, “is that in his last debate, Trump said, ‘H-1B, whatever it is, I use it but I don’t like it.’
      “‘I want to scrap all H-1B Visas,’ Trump declared.
      “That’s very worrying for India’s export-led growth going forward,” Subramanian reiterated.
      Although in most cases H-1B Visas do not come on the radar of the air cargo community, many are anxious to see what the future holds for air exports to the U.S.

So Far, Business Steady

Ramesh Mamidala      For the moment, despite growing concerns, it seems to be business as usual, meaning little-to-no impact up or down in exports to the U.S. FlyingTypers spoke to Ramesh Mamidala, CEO, Celebi Delhi Cargo Terminal Management India Pvt. Ltd, who said:
      “We have not seen any impact on exports from India so far, although it is still too early.”
      However, he pointed out that “based on my understanding of the new regime’s vision for growth of the U.S., I believe in the long term the knowledge-based organizations (applying for H-1B Visas) that depend on exports of their services to the U.S. might be impacted.”
      ACNFT talked to air cargo stakeholders who pointed out that there was nothing to worry about for now.

India Will Look For Markets Minus U.S.

Hemanth D.P.      Quite a few transportation experts mentioned remarks from Hemanth D. P., Chief Operating Officer, Aero-Commercial, Cargo and Asia Pacific Flying School, GMR Hyderabad International Airport.
      “The orders for exports to the U.S. in pharma, electronics, and automotive were done at least six to eight months ago,” Hemanth said.
      “The Trump Administration’s trade policies will take time to kick in and by that time, hopefully, other nations will open their gates wider.”      
      Exporters, nevertheless, are keeping their fingers crossed since they have been unable to decipher what the Trump Administration will come up with next in its protectionist tirade.

A Better Idea

      The Ford Motor Company is among the many U.S. companies with manufacturing facilities in India.
      Ford features three manufacturing plants in the country, with a recent one in Gujarat (Prime Minister Modi’s home state) built with an investment of one billion dollars, driving the desire to triple the export of Ford vehicles from India.
      Along with aviation majors like Boeing and Lockheed Martin, there is also tech major, Apple, which has decided to start production of iPhones from India.
      The wonder in some circles is whether the President Trump era will also cease production for companies in India.
      At least for now, Ford, for example, has decided to continue exporting the India-made Ecosport to the U.S.

Customs Tariffs In The Wings?

      If President Trump goes through with his protectionist measures, India would cease being a viable location for these manufacturers because they will face high customs duties for exports to the U.S. Additionally, India will not be the first choice for those who source goods from the country for the U.S. markets, since these will be more expensive.
      This draconian situation would result in a big blow to the Prime Minister’s Make in India program, where loss of jobs as well as repatriation of funds would clobber India’s economy (at least in the short run).

Voice Of Freight Forwarders

Samir J. Shah Shesh Kulkarni     Indian freight forwarders, or at least a section of them, however, have their say here.
      The Federation of Freight Forwarders’ Associations in India (FFFAI) Chairman Samir J. Shah said that while it was true Donald Trump had certain commitments to fulfill regarding protection of ‘national interests,’ and trade and commerce would be the prime focus in this direction, “We don’t see any major shift from the ongoing and future bilateral trade relationship between India and the U.S.
      “India has never been treated by the U.S. as a contender that can pose a threat of influx of goods and human resources to America.
      “On the other hand, in the U.S. there is always a huge demand for quality goods and manpower, especially from India.”
      Likewise, MIQ Logistics India (part of the US-based logistics company) Managing Director Shesh Kulkarni pointed out that all over the world, the reaction to Donald Trump’s election was mixed:
      “Some were for it, while many have been opposing it.
      “In my view point, the real issue is that while no one expected Trump to win, he has.
      “I personally think that the noise will settle down and he must get his space to operate...
      “Like the world needs America, America, too, needs the world.
      “All the export sectors—pharma, automotive, electronic components—all will see gains.”

IT Impact?

      Both Kulkarni (and Samir Shah) did caution that the Indian IT industry “might take a beating” if Trump succeeded in boosting manufacturing back in America.
      “However, the outcome we expect (and hope for) plays out as good for India since India is a good trade partner for America, and Trump acknowledges that.
      “Long term, India will benefit when the dust settles down and President Trump gets down to doing business as President of America,” Kulkarni said.

Protectionist Natural Thing To Do

       Ramesh Mamidala, and a host of other cargo stakeholders, held the following view:
      “It is natural for any country to protect their economy when it is important for them to generate employment and better secure the nation.
      “So far, what I have seen fall on the lines of job creation and improving security. Dollar appreciation may not encourage more exports out of the U.S., but may encourage same or more levels of import.
      “On a different note, even if the U.S. wants to produce more for export or domestic consumption, the country needs to import raw material.
      “Therefore, I do not foresee the level of trade slowing or decreasing.
      “However, given Mr. Trump’s success in his personal business, I believe the country’s economy will expand, leading to creation of more jobs and thus increasing consumption, which should lead to more trade activity—both sea and air—as well as import and export,” Ramesh said.

Time & The River

Cyrus Katgara      Jeena and Company Partner Cyrus Katgara: “The key agenda of Trump is to check terrorism and immigration to protect jobs for Americans. He also wants to check unfair trade practices with special focus on China.”
      Katgara went on to point out that all this “has not had any adverse impact on India’s trade with the United States.”
      “There is no hostility expressed towards Indians or Indian businesses by the Trump Administration.
      “We in India have no reasons to worry with the Trump administration.
      “On the contrary, India with its democratic form of government and liberal and fair international trade and investment policies is likely to emerge a strong ally of the United States in its effort to bring transparency and fair trade practices in the global business environment.”

Here Is The Hope

       Taking the ‘think positive’ line a bit further, FFFAI’s Shah, in fact, exuded confidence.
      “We believe India is capable of supplying high quality export items to cater to the demands of the U.S. manufacturing industry.
      “On the other hand, in view of the present global market ecosystem, India is the most promising and viable market for consuming huge imported products from the U.S.,” he said.
      He was optimistic:
      “A pragmatic Trump would not restrain the healthy, traditional, and recently initiated momentum of bilateral trade between the two countries at this moment.
      The apparently strong government-to-government as well as people-to-people relationships between India and USA will, perhaps, restrain Mr. Trump from creating any trade or other barrier against India considering mutual and long-term benefits.”         
      Mamidala, too, was hopeful.
      He said that India’s “non-pharma exports so far have been dependent on very specific commodities that give us advantage of either cost of manufacturing and/or ability to produce/grow specific raw material.”
      So, he did not “foresee the current export levels being impacted because of new regime’s policies.”
      “I have,” Ramesh said, “also seen our exporters actively working on strategies to develop new markets in Africa, the Middle East, and South America.”
      The Delhi Cargo Terminal CEO said that his “personal understanding is that exports out of India, which might include some low- to medium-end smart phones to laptops in about three years, will predominantly go to markets outside the U.S.”

Will Pharma India Soften?

      Indeed, pharma exports from India could see a dive.
      A few days after Trump’s inauguration—January 23, to be exact—the country’s top pharma stocks went to a four-year low.
      Reason: The pharma industry’s fear of U.S. exports going down.
      In 2015-16, total pharma exports from India amounted to around $17 billion, with the U.S. accounting for well over 30 percent of the exports.
      Mamidala commented, “One specific commodity where we have significant cost advantage, which is pharma, may get impacted if the policies change in favor of U.S.-based manufacturing companies. That is yet to be seen.”
Tirthankar Ghosh

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