India has the potential to enhance its position in global supply chains, particularly in artificial intelligence (AI) and semiconductors, amid shifts in U.S. trade policies that may follow Donald Trump’s potential return to power, according to a report by Motilal Oswal.
Opportunities in AI and Semiconductors
The report highlights that India’s strategic focus, including its “China+1” policy and prior investments in key industries, positions the country as a strong contender to reshape global supply chains. Technology sectors such as AI and semiconductors stand to benefit significantly, as global players seek to reduce their reliance on China.
“India could bolster its position in global supply chains, particularly in technology sectors like AI and semiconductors, due to previous investments and policy shifts such as the ‘China+1’ strategy,” the report stated.
Scope for Growth in Pharmaceuticals and Defense
In addition to technology, Indian businesses in pharmaceuticals and defense could see new growth opportunities, especially if U.S.-India collaborations deepen. The report noted that a stronger strategic partnership, driven by enhanced Indo-Pacific defense strategies, could allow Indian firms to tap into U.S. markets and align with evolving economic priorities.
“Indian businesses in sectors such as pharmaceuticals and defense might also find new opportunities, especially if U.S.-India collaboration strengthens,” it added.
Despite these opportunities, the report warned of significant challenges. Trump’s potential protectionist stance could result in higher U.S. tariffs and a stronger dollar, increasing export costs for emerging markets like India. Sectors such as IT and pharmaceuticals are particularly vulnerable to these pressures.
“Some countries could see increased costs for exports due to a stronger dollar and higher tariffs, particularly affecting IT and pharmaceutical sectors,” the report explained.
The report also acknowledged that while India has a chance to strengthen its global position, other nations like Mexico could gain from companies shifting manufacturing from China to low-cost regions.
The report emphasized that Trump’s return could bring a mix of economic growth and heightened global trade tensions. For India, the key will be staying agile and strategically aligned with global trends to navigate this evolving and complex landscape effectively.
