Future of Indian IT with Shifting Global Dynamics - Industry Views

The information technology sector in India has been booming ever since its inception. Despite witnessing ups and downs, it has seen consistent growth over the years. Slowly India has also emerged in the IT Hardware manufacturing domain. 

The future of IT hardware in India looks promising, driven by increased digitalization, government initiatives like "Make in India," and a growing domestic market for technology products. Yet changing global dynamics, whether technological or political does affect the Indian IT hardware sector as well.

With the US presidential results, and restrained China imports by several countries can lead to both positive and negative impacts on the Indian IT sector. 

Indian IT Association leaders shared their insights on how recent global developments going to impact the Indian IT domain.

Impact of Global Development on Indian IT Manufacturing Sector - IT Association Insights

"Donald Trump returned to the White House. His return heralds a complicated mix of opportunity and risk. Under his earlier administration, India and the U.S. grew closer, particularly as Trump positioned India as a vital partner in counterbalancing China’s growing influence. With the U.S. now India’s largest trade partner, valued at approximately $120 billion in the last fiscal year, the stakes are high for New Delhi. Trump’s inclination towards strategic autonomy and transactional diplomacy means that while India’s geopolitical significance may rise, the nation must tread carefully, balancing cooperation with caution as it seeks favourable terms in an unpredictable landscape.

The primary area of focus is the Indo-Pacific, where the U.S.-China rivalry continues to intensify. Trump has always viewed China as a strategic adversary, and this stance is likely to persist as he resumes office. His administration has signalled that containing China’s influence in Asia is a top priority, with India playing a pivotal role as a regional ally. The resurgence of the Quadrilateral Security Dialogue (the Quad) involving the U.S., India, Japan, and Australia underscores a shared commitment to maintaining stability in the Asia-Pacific, although working with Trump’s sometimes erratic leadership style will be challenging for these partners.

Trade relations with India are likely to be a delicate balance of diplomacy and protectionism. Trump’s campaign pledge to impose a sweeping tariff of 10-20% on all imported goods, aiming to bolster U.S. manufacturing, poses a substantial threat to India’s export sector, including textiles, pharmaceuticals, and IT services.

India, in contrast, may benefit from the U.S. seeking alternatives to China, particularly in manufacturing, defence, and technology. Trump’s preference for self-sufficiency and disengagement from Beijing could bolster Indian exports in these sectors, as American companies look to diversify their supply chains. India’s rapid growth in digital services and its expanding manufacturing capabilities position it as an attractive partner for the U.S. in its quest to reduce dependence on Chinese products. Nevertheless, India must remain vigilant, as Trump’s tariffs could impact Indian industries dependent on raw materials or parts from global sources, adding complexity to cross-border trade," shared, M Veera Swamy, President, TCDDA

"Very true that the Trump 2.0 term as it is referred to everywhere, may be opening new opportunities to the Indian IT Sector in many ways yet it will be posing some challenges as well. I’m not an expert or analyst but as per other noted analysts and experts there are several ‘ifs and buts’ relating to the opportunities for Indian tech firms. If the record of the Trump administration is any indication, Indian tech firms are set to gain from Trump’s new plans while H-1B Visa holders are expected to face some uncertainties.

In Trump 2.0, higher tariffs on Indian imports are a possibility. Trump’s proposed 20% tariffs on all imports, with even higher rates on Chinese goods, are a major concern.

Retail clients of Indian IT firms are keeping their fingers crossed to see how such tariffs might affect budgets and consumer prices. Likely policy changes will certainly have a ripple effect on the Indian economy, especially in the manufacturing and technology sector. However, the international trade scenario is changing fast and Trump must have learnt lessons from the impact of its stringent policies during Trump 1.0. India is also no longer the same and has been making its presence felt on every trade front with its large labour force and growing manufacturing capabilities, hence stands to benefit, particularly in sectors such as electronics and technology.

Undoubtedly, India is a strong contender of being a replacement for China along with a couple of more Asian countries like Taiwan & Malaysia. Still, we must not forget that with a massive workforce, resources and expertise in the IT sector India is dominating not only the small or developing nations but has proved itself against some of the developed countries too. After the Modi Govt.’s Make In India policy, many of the IT and Techie Giants like Apple, Dell, HP, Motorola etc. have already set up their manufacturing units in India and many more are in process. Present Govt.’s successful Mangal Mission, Aditya-L1 Mission, and Chandrayaan Program whole world is biting its nails in speculating our capabilities. Indian CEOs are ruling the world e.g. Sundar Pichai (Google), Satya Nadela (Microsoft), Shantanu Narayan (Adobe), Arvind Krishna (IBM), and Ajay Banga (President World Bank) are a few names and the list is not exhaustive. Also, India’s friendly and philanthropist ideology towards every nation makes it a natural choice for tie-ups be it developed or developing nations and the US is not an exception." shared, Amitabh S. Vidyarthy, President, Jamshedpur IT Association (JITA).

Conclusion

India's IT sector, including hardware manufacturing, continues to grow with strong domestic initiatives like Make in India and increasing digitalization. However, global developments, such as the return of Donald Trump to the U.S. presidency and changes in international trade dynamics, present both opportunities and challenges.  

India may benefit from the U.S. seeking alternatives to China, especially in manufacturing, and technology. However, proposed higher tariffs on imports and uncertainties surrounding H-1B visas could impact Indian exports and workforce mobility.

Despite these challenges, India's expanding manufacturing capabilities, and global leadership in technology position it as a strong contender for growth. With its evolving presence in international trade and innovation, India will leverage global shifts while addressing potential hurdles.

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