India and the US were at odds over data localisation during Donald Trump's initial term.
India should diversify IT exports in order to reduce the risk of tariffs under Donald Trump, as a large portion of India's IT revenue is derived from the United States. This was stated by Global Trade Research Initiative on Sunday.
India's software exports reached $205 billion by 2023-24. According to the Reserve Bank of India (RBI)'s annual survey on computer-software and information technology enabled services (ITES) exported, 54% of these exports were from the US, with Europe coming in second at 31%.
Trump has also taken several measures during his first term to limit immigration. Trump also made a key promise in his polls to curb immigration.
GTRI said that India must also strengthen its data policies and resist pressures from outside to freely share data. It should also continue to reject the Indo-Pacific Economic Framework for Prosperity trade pillar which could limit India's digital and labour policy.
During Trump’s first term, the US and India were at odds over the localisation of data. India refused to change its stance regarding data localisation when it came to plurilateral agreements with the WTO, and instead tightened its regulations. In April 2018, for example, the RBI required that payment system providers such as Mastercard, Visa and American Express store Indian residents' payments data in India.
India's draft policy on e-commerce, which contains robust provisions for localisation, is still stalled. This could be due to US pressure.
The report highlighted that other countries, such as Mexico, Canada and the ASEAN group, benefited more than India from the US-China Trade War. GTRI stated that India needs to strengthen its supply chains at home, produce key intermediates in order to reduce reliance upon China, improve cost efficiency, and make it easier to do business. This will help to increase export competitiveness.
GTRI stated that India's trade landscape is changing as Donald Trump returns to the US presidency. Trump's plans to impose new tariffs on Mexico, Canada and China could be beneficial for India.
India also gained significantly. US imports of Indian goods increased by $36,8 billion in this time period, from $50.5 billion up to $87.3 billion. India was the 6th biggest contributor to the increase in US imports, according to the report.
The key drivers of India's growth in exports were smartphones and telecom equipment. They contributed $6.2 billion (17.2% of the total), followed by medicines ($4.5 billion (12.4%), petroleum oil at $2.5 billion (6.8%), and solar panels at $1.9 billion (5.3%). Together, gold jewellery and lab-grown stones added $2.3 billion.
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