SEMINAR REPORT ON

“TRUMP’S ADMINISTRATION: IMPACT ON INDIAN

ECONOMY”
By

ASHWATH P
USN: 1MY16MBA13

Under the guidance of

DR. A. MAHALAKSHMI
Associate Professor
Department of Management Studies
RIT Bengaluru

Submitted to

DEPARTMENT OF MANAGEMENT STUDIES

RAMAIAH INSTITUTE OF TECHNOLOGY
BENGALURU (2017-18)
 CERTIFICATE

This is to certify that MR. ASHWATH P. bearing USN:1MY16MBA13, is a

bonafide student of Master of Business Administration course (Batch: 2016-18) of
the RAMAIAH INSTITUTE OF TECHNOLOGY, affiliated to
VISVESVARAYA TECHNOLOGICAL UNIVERSITY (VTU), Belgaum.
Seminar report on “TRUMP ADMINISTRATION: IMAPCT ON INDIAN
ECONOMY” is prepared by him under the guidance of DR. A.
MAHALAKSHMI, Associate Professor, in partial fulfillment of the requirements
for the award of the degree of Master of Business Administration of Visvesvaraya
Technological University (VTU), Belgaum, Karnataka.

Dr. A. Mahalakshmi Dr. P.V.Raveendra N.V.R.Naidu

Associate Professor HOD Principal

Guide Dept. of Management Studies RIT

RIT
 DECLARATION

I Ashwath P., hereby declare that the seminar report entitled “Trump’s
Administration: Impact on Indian Economy” prepared by me under the
guidance of Dr. A. Mahalakshmi , Associate Professor of MBA Department,
Ramaiah Institute of Technology.

I also declare that this seminar report work is towards the partial fulfillment of the
university regulations for the award of the degree of Master of Business
Administration by VTU, Belgaum.

I further declare that the seminar report is based on the study done by me through
secondary data.

Date:

Place: Bengaluru ASHWATH P.

 ACKNOWLEDGEMENT

I take this opportunity to express my deep sense of gratitude to my guide Dr. A.

Mahalakshmi, Associate Professor for this guidance in preparing seminar report.
Despite her busy schedule she has guided me throughout my seminar report work.

I also express my deep sense of gratitude to Prof. P.V. Raveendra (HOD) and the
Principal N.V.R. Naidu, Ramaiah Institute of Technology, Bengaluru for their
valuable support and motivation.

I also thank my parents and friends who helped me in this work.

Eventually I would to thank all those who helped me directly and indirectly in
bringing on this report.

Date:

Place: Bengaluru ASHWATH P.

 TABLE OF CONTENTS
CHAPTER PARTICULARS PAGE NO
EXECUTIVE SUMMARY
1 INTRODUCTION
1.1 Introduction about the Internship
1.2 Topic Chosen for the Study
1.3 Need for the study
1.4 Objectives for the study
1.5 Scope for the study
1.6 Methodology adopted
1.7 Limitations of the study
1.8 Review of literature
2 DESCRIPTION
2.1 Donald Trump’s administration
2.2 Relation between us administration and Indian economy
2.3 Impact of us administration on Indian economy
2.3.A Impact of H1B Visa order on Employment
2.3.B Impact of corporate tax rate cut on Make in India
mission
2.3.C Impact of “ Buy American, Hire American” on IT
and Outsourcing
2.3.D Impact on security market
2.3.E Possible impact on Real Estate
3 SUMMARY OF FINDINGS, CONCLUSION AND
SUGGESTIONS
3.1 Summary of findings
3.2 Conclusion
3.3 Suggestions
BIBLIOGRAPHY
 TABLE OF FIGURES AND TABLES

TABLE PARTICULARS PAGE NO

NO.
1 Table showing Imports/ Exports/ Trade Deficits of the United
States in 2014
2 Table showing top H1B visa sponsors in 2016
3 Table showing loss in market capitalisation of tech companies
 EXECUTIVE SUMMARY

This study focuses on impact of Trump administration on Indian economy,

simplifying it to impact on selected sectors of Indian economy. The sectors
under study include those which are directly affected by the policies of Donald
Trump like IT, outsourcing, employment, Make in India mission, Indian
securities market and the real estate.

It includes of three chapters. First chapter is the introduction of the Seminar

Report which states the topic chosen, need, objective, scope, methodology, and
limitations of the study. Second chapter describes the topic by segregating it into
impact of Trump administration various sectors of Indian economy, namely,
employment, IT, outsourcing, Make in India mission and security market. The
description part is supported with tables and figures. Lastly the third chapter
indicates the Summary of the findings, conclusion of the study and provides the
suggestions and recommendations from the study.
 CHAPTER 1

INTRODUCTION

1.1: INTRODCUTION ABOUT THE REPORT:

This report is prepared as a partial fulfillment of tasks under the subject

‘Seminar’. I have chosen “Trump’s Administration: Impact on Indian
Economy” as my topic. Since India and US are major trading partners to
each other, this report attempts to study the possible impact of US
administration on Indian economy and come out with suggestions. It is
based on secondary data provided by respective government’s statistical
websites.

1.2: TOPIC CHOSEN FOR THE STUDY:

The topic chosen for my seminar report is “Trump’s Administration: Impact

on Indian Economy”.

1.3: NEED FOR THE STUDY:

US and India have a positive economic relation. Both are major trading
partners for each other. When a new President gets elected in most powerful
countries of the world, it becomes an area of study to know the possible
impact of its new administration on its partner countries. It necessitates to
study the sectors that will get affected by the new administration and
prepare counter strategies to minimize its negative effect.
1.4: OBJECTIVES OF THE STUDY:

1. To understand the ways in which US administration impacts Indian

economy.
2. To study the sectors that got affected by Trump’s policies.
3. To analyze the possible impact of Trump’s administration on Indian
economy.

1.5: SCOPE OF THE STUDY:

The scope of the study is only to the extent of economic policies

undertaken by Donald Trump which will have impact on the Indian
economy. As of august 2017, Trump has issued 42 executive orders and 51
presidential memoranda. All 42 executive orders are not included in this
study. Only those orders which will have possible impact on Indian
economy are taken for study. The scope includes tightening of H1B visa
regulations, reduction of corporate tax rate, Buy American-Hire American
policy, reaction of Indian security market and Trump’s entry into Indian
real estate.

1.6: METHODOLOGY ADOPTED:

The methodology adopted to collect information for this seminar report is

secondary data from various government and consultancy websites. This
topic does not cover any area wherein we can collect primary data. Thus
focus was given on collecting latest genuine secondary data by choosing
statistical government websites.
1.7: LIMITATIONS OF THE STUDY:

1. It is only 7 months since Donald Trump has taken over office as

President of US. So it is too early to say about the impact of his
administration on Indian economy.
2. The orders and missions of Donald Trump are in process and not
completely implemented. Thus prediction is made on possible impact on
Indian economy.

1.8: REVIEW OF LITERATURE:

 CHAPTER 2

DESCRIPTION

2.1 DONALD TRUMP’S ADMINISTRATION:

Donald Trump is the 45th president of United States of America
succeeding Barack Obama. He took the charge as President on 20 th
January 2017. He Is bold, energetic and aggressive leader. During his
presidency, critics have argued that Trump showed signs of
authoritarianism. His policies are pro-business and mostly economic in
nature. Hence his policies are called as trumponomics. His major
decisions after taking over as President are sharp reduction in corporate
tax rate, travel ban, “Buy American, Hire American”, climate change
policy reversal, etc.
As of august 2017, Trump has issued 42 executive orders and 51
presidential memoranda.

2.2 RELATION BETWEEN US ADMINISTRATION AND INDIAN

ECONOMY:
India and USA have a positive economic relation. Since USA is the
largest market for India’s exports, the increasing strength of the USA
economic will have a direct positive impact on India’s export. USA is
strategic partner of India. USA is the top trading partner of India with
about US $42 billion exports to USA. (Table No.1) Also, India is the top
destination for USA exports as India is going to be third largest consumer
in the world by 2020.
 Imports/ Exports/ Trade Deficits of the United States in 2014 ($Millions) [32][33]
Country Exports Imports Trade Deficit
China 123,676 446,754 343,078
European Union 276,142 418,754 142,059
Germany 49,363 123,260 73,897
Japan 66,827 134,004 67,117
Mexico 240,249 294,074 53,825
Canada 312,421 347,798 35,377
Saudi Arabia 18,705 47,041 28,336
Ireland 7,806 33,956 26,150
Italy 16,968 42,115 25,147
South Korea 44,471 69,518 25,047
India 21,608 45,244 23,636
Malaysia 13,068 30,420 17,352
France 31,301 46,874 15,573

2.3 IMPACT OF US ADMINISTRATION ON INDIAN ECONOMY:

 Impact of H1B Visa order on Employment

 Impact of corporate tax rate cut on Make in India mission
 Impact of “ Buy American, Hire American” on IT and Outsourcing
 Impact on security market
 Possible impact on Real Estate
A. Impact of H1B Visa order on Employment: Introduction

The H-1B visa is an employment-based, non-immigrant visa category for

temporary workers. An employer must offer a job and apply for H-1B visa
petition with the US Immigration Department. The programme is open to
a broad range of occupations, including architects, professors and even
fashion models.

Critics of the H-1B programme argue it is being used by companies to

hire temporary foreign workers on low salaries to displace local American
workers on higher salaries. They have targeted Indian IT companies such
as Infosys, Tata Consultancy Services and Wipro accusing them of
“gaming the system” by cornering a large portion of the annual
disbursement of H-1Bs with a large number of applications. The
programme is capped at 85,000 new H-1B visas each year—65,000 to
foreigners and 20,000 more are granted to those with advanced
degrees. The biggest employers are Indian companies such as Wipro
Technologies, Infosys, Tech Mahindra and Tata Consultancy
Services.

Earlier Scenario:
Major users of this visa are Indian companies-TCS, Wipro, Infosys, etc. In
2014, 86% of the new visas were issued to Indians. H1B visa was an
Indian’s easy route to US. Companies used these visas to reduce their
human resource cost by hiring low paying workers from India. (Table
No.2)
Trump’s order:
On April 18, 2017, Trump signed H1B visa order to tighten rules on
foreign workers. The order doesn’t change existing rules, but the objective
is to modify or replace the current lottery for H1B visas with a merit based
system that will restrict the visas to highly skilled workers.
This is in support to his mission of “Buy American, Hire American”.
Impact:
The order will replace the current lottery system of H1B visas with a merit
based system and restrict visas to highly skilled workers. One expected
change in rules is the doubling of the minimum salary of visa holders to
$130000. If that happens, India’s software services industry, already
facing pressures on profitability and revenue, will be forced to make
fundamental changes in their business strategies, including hiring more
American workers at the cost of Indian employees usually deployed on
client sites in the US.
B. Impact of corporate tax rate cut on Make in India mission

Introduction

USA is the highly taxed among the developed countries in the world. The
corporate tax rate is 39.6% and the profit brought to USA from overseas
subsidiaries was additionally taxed at 35% with a credit for tax already paid. It
means if a American subsidiary in foreign country wants to bring the profits
back to US, then it has to pay additional tax of 35% to USA. This is done to
discourage the repatriate of profits.

Make in India is an initiative by Government of India to encourage national as

well as MNCs to manufacture their products in India with a primary goal of
making India a global manufacturing hub. Make in India has introduced
multiple new initiatives, promoting FDI, implementing intellectual property
rights and developing manufacturing sector.

Trump’s order:
Trump unveiled a proposal for a major corporate tax cut, involving
dramatically cutting corporate tax rate to 15% from 39.6% and ending
taxation of corporate profits earned overseas and thus introducing territorial
system.
Impact:

Positive: Under the proposed territorial system, the company could bring the
overseas profits back to the US with no additional tax. The territorial tax
system will encourage American subsidiaries to return after tax profits to US,
further increasing capital formation and growth. But a US territorial system
also makes it more attractive for firms to invest abroad since they can
repatriate the profit earned abroad. India should take advantage of these new
rules to induce American firm to invest in Indian manufacturing.
Negative: The lower corporate tax will attract capital to USA and hit dream of
Make in India mission.

C. Impact of “Buy American, Hire American” on IT and

Outsourcing:

Introduction
“Buy American, Hire American” is a new mission undertaken by Donald
Trump which means buy products/services which are done by/in America and
hire American citizens for work. So that their country gets lot of jobs created
and use more citizens for jobs thus increasing economy, employment ratio. The
executive order brings to life, President Trump’s pre-election rhetoric of
bringing jobs for Americans. In India, the Indian IT sector is heavily dependent
on North America for its revenue. Around 60% of India’s software exports are
made for North America. For this 60% of IT services revenue, IT firms in
India are heavily reliant on American visa policies to deliver cost-competitive
IT Solutions.
Infosys, Wipro and Tata Consultancy services are among the top Indian IT
firms which consistently seek for American work visa for Indian workers in
computer occupations.

Trump’s order:
Trump announced “Buy American, Hire American” mission which includes
tightening visas for foreign workers and the tech companies that use cheap
foreign labor.

The visa changes proposes the doubling of the minimum salary of H1-B visa
holders to $130,000 which will make it almost needless to these offshore IT
firms to prefer an Indian over an American.

Trump also announced to charge additional tax of 35% on products made

overseas to encourage his mission.

Impact:
This new announcement will adversely impact the hiring plans of Indian
technology firms, which have grown over the past three decades. Because a
large number of American companies outsourced the non-core IT work at a
cheaper cost to Indian tech firms that helped in building the $160 billion
Indian IT industry.
Doubling of minimum salary to H1B visa holders will increase the human
resource costs to tech companies in US.
D. Impact on security market

Introduction

Indian security market is very sensitive to all administrative, political and

economic news of US. Every decision that US administration takes impacts the
security market of India.

Trump’s order

Trump’s order relating to H1B visas, corporate tax rate cut and Buy American
Hire American together affected the financial markets of India.

Impact:
The recent signing of various executive orders by Donald Trump made Indian
stock markets tumble. The stocks of tech companies saw dramatic slump when
Trump announced tightening of H1B visas and Buy American and Hire
American order. The following table shows tech stocks going on trouble on
announcement of H1B visa order (Table No.3)
E. Possible impact on Real Estate

Introduction
Donald Trump owns a private international conglomerate called The Trump
Organization, based in Trump Tower in Midtown Manhattan, New York City. It
serves as the holding company for all the business ventures of Donald Trump.
Trump has generated more than $74 million in real estate licensing deals and has
$823.3 million worth of real estate in joint ventures.

Recent News
Trump has invested in India as India depicted growth opportunity in real estate.
The gross value of five projects is around $1.5 billion and also he signed for his
brand license for Chorida Brothers.

Possible Impact

Trump’s investment will attract other foreign players in real estate to invest in
India. This will increase FDI and FII to India. The increased competition will
reduce the high prices of real estate. It will generate more employment
opportunities in such regions.

In negative side, Trump’s investment will hit domestic real estate companies and
increase competition.
 CHAPTER 3
SUMMARY OF FINDINGS, CONCLUSION AND
SUGGESTIONS

3.1 SUMMARY OF FINDINGS

It is found in the study that US administration impacts India and its economy in
huge way. The trades between two partners are in billion dollars and IT is the
major sector involved in the trade between two partners.

Donald Trump is aggressive leader with bringing major policies that will affect
not only India but also other nations of the world. His leadership style and
policies are dramatically different from that of Barack Obama. In just 7 months
of his rule as President, Trump has given many shocks to India and its
companies.

It is found that IT sector is the major victim of the Trump’s tightening of H1B
visa policy and the policy of ‘Buy American, Hire American’. The dramatic
reduction of corporate tax rate by Trump has also affected India’s mission of
Make in India.

It does not mean that IT companies in US should give up their business and
return back to India. In one side, Indian IT companies got shock due to H1B visa
order; on the other hand, they have advantage of larger client base and less
corporate tax rate in US.
3.2 CONCLUSION

It is important for Indian economy to have a watch on the US administration and

its new policies. This will help Indian economy to take precautionary measures
well in advance and avoid sudden shocks.

Sectors like IT is largely affected by US administration in terms of visas to its

employees and outsourcing aspects. Tightening of H1B visa regulations by US
has led Indian IT companies in US to redefine their business model and look for
replacement of cheap skilled Indian worker.

The reduction of corporate tax rate by US is attracting investment in US and

hence affecting India’s mission of Make in India. The proposed territorial
system will attract investments in India as US companies can now repatriate
their profits earned abroad without any additional taxes. The India must prepare
itself in terms of tariffs and infrastructure to gain the attention of American
firms.

The new policy of ‘Buy American, Hire American’ is going to affect Indian
outsourcing as this policy proposes to charge extra 30% on the products
outsourced outside.

Since it is only 7 months of Trump’s administration, it is too early to draw

conclusion on its impact on Indian economy. Trump’s economic policies are
pro-business and thus there is little to worry.
3.3 SUGGESTIONS

 India should make use of the proposed territorial system to induce

American firms to invest in Indian manufacturing as it is more attractive
for American firms to invest abroad since they can repatriate the profits
earned abroad.
 Rising wage rates in China and introduction of GST in India are further
reasons for American firms to shift production from China to India. India
should reduce tariffs and other impediments to imports of machinery and
of components that could be used in India by foreign firms and improve
infrastructure and education.
 Indian IT firms in US should change their business model to hire more
locals and deploying more automation to tide over these visa-related
challenges.
 Indian firms in US must unite and approach the President through
bureaucratic means to reflect their contribution to the growth of US and its
GDP and stress on liberalizing the H1B visa issue.
 Corporate tax rate in India should be brought down to certain extent to
attract investment from American firms.
 The Indian governments, through diplomatic channels convince US
administration to liberalize H1B visa tightening in next Indo-US meet.
 As minimum wage rate under H1B visa is increased to $130000, it
becomes costly to hire Indian workers. Thus Indian companies in US can
train US citizens and hire them for work.
 BIBLIOGRAPHY

ARTICLES/ BLOGS:

1. Article by Marshall M. Bouton titled “The Trump Administration’s

India Opportunity” in Asia Society Policy Institute dated 18 th May
2017
2. Article by Martin Feldstein titled “American economic policy’s impact
on Indian business” in Economic Times dated March 24, 2017
3. Article by Ben Jacobs, Lauren Gambino and Dominic Rushe in The
Guardian dated 26th April 2017

WEBLOGRAPHY:

1. BBC News
2. United States Census Bureau
3. PolitiPlatform of Donald Trump
4. Wikipedia
5. Quora