India need not worry much on the bilateral trade despite US president Donald Trump's protectionist stance, given that the South Asian country's trade deficit with America is insignificant. This, when compared to huge deficits that the US runs with China, Germany and even Mexico.
However, India has cause for concern on the visa front since it derives about 60 percent of its software revenues from the US and Canada, according to a DBS Bank economist.
America's trade deficit with India was $1.8 billion in November 2016, much lower than China ($28.4 billion), Japan ($5.7 billion), Mexico ($5.7 billion) and Germany ($5.3 billion) according to provisional data published by the US Bureau of Economic Analysis on January 6, 2017.
"This suggests India will not be the foremost in the US' protectionist radar. But the bigger stickling point will be service trade flows, as US and Canada make up for 60% of India's software exports," Radhika Rao, economist, group research, DBS Bank, said in a note on Wednesday.
The looming threat of curbs on H-1B visa that are mostly utilised by Indian IT companies remains a significant threat, she said.
"Bulk of the India-based operations overseas is to meet local business (territorial needs), with these investments at risk if operations of such foreign affiliates is curtailed or visa restrictions are imposed. There are indications that fresh legislation might be introduced in the coming weeks, which will hurt the issuance of fresh non-immigrant visas," Rao wrote in her note.
Remittances could be hit
Another matter that India needs to factor in is the likely drop in remittances by non-resident Indians (NRIs), should there by a disruption due to visa restrictions. "Remittances and service trade receipts from the US make up close to 2.8% of (India's) GDP, playing an important role for the balance of payment dynamics," the economist said.
A study by Pew Research Center said that remittances by NRIs living in the US stood at $11 billion in 2015. The overall remittances by NRIs across the world was $69 billion in 2015.