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US investors participated in approximately 30 per cent of Indian startup transactions in 2020, contributing 60 per cent of the funding.
Donald Trump has become 47th President of USA. (Photo: CNN-News18)
Authored By Sandiip Bhammer:
As one of the world’s most influential economies, the US dramatically impacts global markets, including emerging economies such as India. With a robust and growing startup ecosystem, expected to grow at 12-15 per cent annually, India’s reliance on foreign investment, particularly from US investors, positions it to feel the repercussions of the US election closely. US investors participated in approximately 30 per cent of Indian startup transactions in 2020, contributing 60 per cent of the funding. Therefore, how each administration approaches trade, regulation, and investment will shape this sector’s immediate future.
US-India Economic Ties and Startup Funding
As mentioned earlier, economic collaboration between the US and India has been crucial for the growth of India’s startup sector. With Trump’s victory, the new administration’s pro-business approach could increase investments in traditional industries like manufacturing and infrastructure. Indian startups in these sectors may benefit from heightened US interest and support, assuming the administration adopts mutually beneficial trade policies with India.
Focus on Innovation and Traditional Growth
Under Trump’s admiration, there exists the potential for a lesser focus on green technology. However, Indian startups prioritising innovation in critical areas such as manufacturing, industrial technology, and infrastructure could still benefit. If Trump remains committed to promoting industrial and technological growth, there may be opportunities for collaboration between the two countries, particularly for startups that align with these priorities.
Immigration and Talent Exchange
Over 5.4 million Indians reside in the US, significantly impacting culture and the workforce. Policies that promote immigration will expand this talent pool, benefiting Indian startups, particularly in sectors that require advanced technical skills. However, immigration policy has been a key focus of Trump’s election agenda. A renewed emphasis on stricter immigration regulations could hinder the movement of talent between India and the US. While tighter regulations may create challenges for Indian professionals seeking work in the US, India’s robust pipeline of highly skilled workers and entrepreneurs could help maintain momentum within the Indian ecosystem.
India’s Status as a Key Ally and Economic Powerhouse
As India continues establishing itself as a global economic powerhouse and a vital partner of the US, its startup ecosystem will still attract significant foreign investment. Despite the anticipated protectionist measures that many expect to be introduced during the Trump administration, India’s unique circumstances may allow it to benefit from more favorable terms than other nations. Additionally, India’s rapid economic growth and potential to quadruple its GDP over the next two decades make it an attractive destination for US investors, regardless of policy shifts.
Conclusion
During Trump’s administration, the impact on Indian startups will likely vary across different sectors. Startups involved in traditional industries, manufacturing, and infrastructure may experience growth, whereas those focused on technology and sustainability could face some hurdles. Nevertheless, India’s emergence as a key strategic partner for the U.S. suggests that the Indian startup ecosystem will likely stay resilient, driven by domestic demand and international collaborations that foster growth opportunities.
(The author is founder and managing partner of Green Frontier Capital, a New York-based climate tech VC firm.)
