Last update:November 7, 2024, 10:49 am IST

American investors participated in around 30 percent of Indian startup deals in 2020, contributing 60 percent of the funding.

Donald Trump became the 47th president of the United States. (Photo: CNN-News18)

Written by Sandiip Bhammer:

As one of the most influential economies in the world, the United States has a significant impact on global markets, including emerging economies like India. With a robust and growing startup ecosystem, expected to grow at 12 to 15 percent annually, India’s dependence on foreign investment, particularly from US investors, positions it to feel closely the repercussions of the American elections. American investors participated in around 30 percent of Indian startup deals in 2020, contributing 60 percent of the funding. Therefore, how each administration approaches trade, regulation and investment will shape the immediate future of this sector.

US-India Economic Ties and Startup Funding

As mentioned earlier, economic collaboration between the United States and India has been crucial for the growth of the startup sector in India. With Trump’s victory, the new administration’s pro-business approach could increase investment in traditional sectors like manufacturing and infrastructure. Indian startups in these sectors could benefit from increased interest and support from the United States, provided the administration adopts mutually beneficial trade policies with India.

Focus on innovation and traditional growth

Under Trump’s admiration, there is potential for less focus on green technology. However, Indian startups that prioritize 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 could be opportunities for collaboration between the two countries, particularly for startups that align with these priorities.

Immigration and talent exchange

More than 5.4 million Indians reside in the United States, which has a significant impact on the culture and workforce. Policies favoring immigration will expand this talent pool, thereby benefiting Indian startups, particularly in sectors that require advanced technical skills. However, immigration policy has been a key part of Trump’s election platform. A renewed emphasis on stricter immigration regulations could hamper the flow of talent between India and the United States. Although stricter regulations may create challenges for Indian professionals seeking work in the United States, India’s strong pipeline of highly skilled workers and entrepreneurs could help keep the Indian ecosystem vibrant.

India’s status as a key ally and economic power

As India continues to establish itself as a global economic power and a critical partner of the United States, its startup ecosystem will continue to attract significant foreign investment. Despite the protectionist measures expected by many under the Trump administration, India’s unique circumstances could allow it to benefit from more favorable terms than other countries. Additionally, India’s rapid economic growth and potential to quadruple its GDP over the next two decades make it an attractive destination for U.S. investors, regardless of policy changes.

Conclusion

Under the Trump administration, the impact on Indian startups will likely vary across different sectors. Startups involved in traditional industries, manufacturing and infrastructure may experience growth, while those focused on technology and sustainability could face some obstacles. Nonetheless, India’s emergence as a key strategic partner of the United States suggests that the Indian startup ecosystem will likely remain resilient, driven by domestic demand and international collaborations that foster growth opportunities.

(The author is founder and managing partner of Green Frontier Capital, a climate technology venture capital firm based in New York.)