India could strengthen position in sector like AI & semiconductors amid Trump return: Motilal Oswal

India has the opportunity to increase its global supply chains in sectors like artificial intelligence (AI) and semiconductors, amid potential shifts in U.S. trade policies, according to a report by Motilal Oswal.

The report analyzed the potential impact of Donald Trump’s protectionist policies in his second term in office.

While Trump’s policies could pose challenges, such as stronger tariffs and a robust U.S. dollar impacting Indian exports, they also present significant opportunities. India, with its “China+1” strategy and past investments in key industries, could play a crucial role in reshaping global supply chains.

“India could bolster its position in global supply chains, particularly in technology sectors like AI and semiconductors, due to previous investments and policy shifts such as the “China+1″ strategy” said the report.

The report highlighted that the technology-related sectors, especially AI and semiconductors, are expected to benefit the most as global players look for alternatives to diversify away from China.

It also stated that the Indian businesses in pharmaceuticals and defense may also find new growth opportunities, particularly if U.S.-India collaborations deepen in response to an enhanced Indo-Pacific defense strategy. A stronger strategic partnership could help Indian firms tap into U.S. markets and align with the country’s evolving economic priorities.

It said “Indian businesses in sectors such as pharmaceuticals and defense might also find new opportunities, especially if U.S.- India collaboration strengthens”

On the other hand, the report also warned that emerging markets like India face challenges due to higher U.S. tariffs and a stronger dollar, which could increase export costs, especially in IT and pharmaceutical sectors.

However, countries like Mexico might benefit as companies shift manufacturing from China to other low-cost regions.

The report added “Some countries could see increased costs for exports due to a stronger dollar and higher tariffs, particularly affecting IT and pharmaceutical sectors”

The report emphasized that Trump’s potential return to power could bring a mix of economic growth and heightened global trade tensions. For India, staying agile and strategically aligned with global trends will be key to navigating this complex landscape.