Donald Trump News / How effective will Trump's 'Make in America' strategy be and how will it affect India

Global politics and trade have become increasingly volatile since Donald Trump became president. His 'Make in America' policy has put pressure on companies to manufacture in the US. The 15% corporate tax proposal is attractive, but high labour costs are a big challenge. This will have a profound impact on India's manufacturing.

Vikrant Shekhawat : Jan 28, 2025, 06:00 AM
Donald Trump News: Donald Trump's victory in the US presidential election last year caused turmoil in the global political and economic landscape. With the promise of making America great again, Trump not only changed domestic policies, but also made a big impact in the international trade and manufacturing sector.

'Make in America' strategy and its impact

Donald Trump offered attractive plans to American companies to increase manufacturing in the country, the most important of which is the proposal of 15% corporate tax rate. The plan promises to provide incentives for production in the US, but it has posed new challenges for manufacturing hubs settled in Asian countries.

However, America's high labor costs may force companies to hesitate. Production costs in the US are much higher than in Asian countries, which can negatively impact the profit margins of companies.

Impact on China and other Asian countries

China has managed to become the hub of global manufacturing in the last few decades through cheap labour, better infrastructure and incentive schemes. Countries like Vietnam, Indonesia and Malaysia also established themselves in the production of electronics, clothing and footwear due to low costs and favourable policies. But the US still has a big lead in chip manufacturing, which reflects its technological leadership.

Status of Indian manufacturing sector

The manufacturing sector in India still faces many structural challenges. India spends only 0.64% of GDP on research and development (R&D), which is much less than China (2.4%) and the US (3.5%). This puts India behind in terms of innovation.

India's logistics cost is around 14-15% of GDP, which reduces the competitiveness of products. Under the National Logistics Policy 2022, a target has been set to reduce it to 9%, but it is still a long process.

Steps like PLI (Production Linked Incentive) scheme have been taken to promote manufacturing, but their effect is slow. Apart from this, old technology and stringent regulations are holding India back in the global manufacturing race.

Impact of Trump's strategy on Indian companies

Trump's 'Make in America' strategy can have a direct impact on Indian companies, especially IT and manufacturing companies. Setting up a manufacturing plant in the US can be expensive for Indian companies, causing them to look for alternative markets.

India not only needs to increase its manufacturing capacity, but also invest in innovation, research and technology. The government should focus on infrastructure and logistics improvement to increase the possibility of competing globally.

Conclusion

Donald Trump's policies are trying to make the US the hub of global manufacturing, but this move presents new challenges for Asian countries. It is time for India to correct its weaknesses and strengthen its manufacturing sector. Fast implementation of the 'Make in India' initiative and greater focus on research and innovation can make the Indian economy competitive on the global stage.