Day 48 – Q. 3. “Rising protectionist tendencies in the United States pose both challenges and opportunities for India’s trade and technology sectors.” Examine. (150 words, 10 marks)

Q. 3. “Rising protectionist tendencies in the United States pose both challenges and opportunities for India’s trade and technology sectors.” Examine. (150 words, 10 marks)

Introduction 

The US, India’s largest trading partner, has shown rising protectionist tendencies in recent  years—through tariffs, visa restrictions, and supply chain reshoring. While this poses  challenges, it also opens doors for India’s trade and tech aspirations. 

Body

Rising Protectionism in the US: Key Trends 

1. Tariff and trade barriers: Post-2018, tariffs on steel, aluminium, and tech products reflect  a shift to America-first trade policies. 
2. Tech nationalism: Restrictions on chip exports, tighter foreign investment scrutiny, and  local manufacturing incentives aim to reduce tech dependence. 
3. Immigration curbs: H-1B visa tightening and job protection narratives have limited Indian  skilled workforce access. 

Challenges for India 

1. IT and Services Sector Impact: Indian IT firms rely heavily on US contracts and talent  movement. Visa restrictions raise costs and reduce flexibility. 
2. Export Uncertainty: Anti-outsourcing sentiment and Buy American policies affect  pharma, steel, and engineering exports from India. 
3. FDI and Tech Ties: Tighter US scrutiny under laws like CFIUS can deter Indian investments  in sensitive tech areas. 
4. WTO strain: US withdrawal from trade norms complicates India’s position in global  negotiations. 

Opportunities for India 

1. China+1 Strategy Advantage: US firms diversifying supply chains away from China are  looking at India for manufacturing and R&D. 
2. Digital Trade Alignment: Shared values on data protection, trusted 5G, and open internet  help India gain US support in global tech rules. 
3. Collaborative Tech Ecosystems: Quad-led initiatives and iCET (Initiative on Critical and  Emerging Technologies) enable co-development in AI, semiconductors, and quantum.
4. Make in India Boost: US interest in Indian electronics and defence production supports  domestic job creation and tech transfer. 

Steps Taken by India 

1. iCET Launch: India and the US are working on critical tech cooperation, talent exchange,  and joint innovation hubs. 
2. PLI Schemes: India’s production-linked incentives for electronics, pharma, and  semiconductors attract US firms amid rising US-China friction. 
3. Trade Talks Revival: India-US Trade Policy Forum (2023) worked on resolving WTO  disputes and increasing market access. 
4. Workforce Diplomacy: India has pushed for smoother H-1B processing and mutual  recognition of skills and degrees. 

Way Forward 

1. Balancing Protectionism with Engagement: India must continue to negotiate favourable  access while leveraging complementarities in tech and innovation. 
2. Diversifying Markets: Expanding ties with EU, ASEAN, and Africa can reduce  overdependence on the US market. 
3. Strengthening Domestic Tech Base: Investing in R&D, skilling, and digital infrastructure  will help India compete globally despite trade barriers. 

Conclusion

Though US protectionism challenges India’s trade and tech sectors, it also creates space for  strategic rebalancing. With smart diplomacy and robust domestic policies, India can turn  these headwinds into meaningful long-term gains.