What will Biden era mean for the world and India?

With Joe Biden being sworn in as the 46th US President, the theme is now centred around “America United”. Being the largest economy, the American policy playbook under a new president matters to all countries. Mint explores what can be expected from the new regime:

Jagadish Shettigar, Pooja Misra
Updated21 Jan 2021, 06:41 AM IST
Being the largest economy, the American policy playbook under a new president matters to all countries
Being the largest economy, the American policy playbook under a new president matters to all countries

With Joe Biden being sworn in as the 46th US President, the theme is now centred around “America United”. Being the largest economy, the American policy playbook under a new president matters to all countries. Mint explores what can be expected from the new regime:

What are the global expectations?

People have been waiting for the president to unfold the broad contours of the US policy on globalization and international relations, especially with China, emerging economies, besides defence spending and economic stimulus in the wake of the covid-19. Most expect a return to the pre-Trump era with the US playing a more active role in world dynamics. With Biden declaring “America is back” and outlining a $1.9 trillion stimulus package, the message is of bold investment to boost the US economy ($1 trillion to be offered as direct relief to households and $440 billion earmarked for small businesses).

What policy changes should India expect?

The US and India see each other as key strategic partners and analysts expect Indo-US relations to be less strained. The coalition against China is likely to persist and ties with India and other Pacific nations, including Japan and Australia, may be further boosted. The major change India is hoping for is in terms of—software exports, H1 visa policy, minimum compensation for engineers via which Trump tried discouraging hiring Indian IT professionals. Of late, the US was seen pressurizing India on its agri subsidy policy, for which, there may not be a major shift, but it might be easier to deal with the new regime.

Trade partners

What will be the impact on Indo-US bilateral relations?

Bilateral trade between the two countries was at $88.75 billion in 2019-20. In 2019, the US was the largest goods export market (17% share) for India and, in terms of goods import supplier, it was the third largest. In April-September 2020, US was the second biggest FDI source for India. It’s likely that higher portfolio investments influenced by federal rates will flow into India.

What will be the US’s attitude to Beijing?

Certainly, Biden might not have a street-smart approach towards another major economic power—whether by putting pressure to scrap the China-2025 plan, or initiating a trade war—but he might show a pragmatic gentlemanly attitude. However, with the covid-19 crisis originating from China, in all probability, migration of US investors may continue; in which case India will be the likely alternative choice. With India focusing on becoming a manufacturing hub, there might be a rise in US funding influx.

What is the future of Indo-US bilateral ties?

With Biden having been the vice president when Obama initiated the Trans-Pacific Partnership (TPP) there will be a likely revival of it. However, TPP getting invigorated will not augur well for India’s textile exports. As for Pakistan, if Biden starts treating Islamabad on a par with India, it will pose a threat to the “Make in India for World” plan. US will try to re-establish it’s role as a super-power, which may lead to rise in expenditure on other economies.

Jagadish Shettigar and Pooja Misra are faculty members at BIMTECH

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First Published:21 Jan 2021, 06:41 AM IST
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