Trump & ‘radical globalism’: Why that is giving shivers to India’s IT industry

US President Donald Trump’s statements criticizing "radical globalism" and targeting U.S. tech companies for outsourcing jobs to India and building factories in China, made during an AI Summit on July 23, 2025, signal a potential shift in U.S. policy that could significantly affect India’s tech industry. 

"For too long, much of our tech industry pursued a radical globalism that left millions of Americans feeling distrustful and betrayed. Everybody knows that. Many of our largest tech companies have reaped the blessings of American freedom while building their factories in China, hiring workers in India and slashing profits in Ireland. You know that. All the while dismissing and even censoring their fellow citizens right here at home. Under President Trump, those days are over. We need US technology companies to be all in for America. We want you to put America first. You have to do that. That's all we ask," Trump said at a high-powered AI summit at Washington on July 23.

Trump’s remarks emphasized ending the practice of U.S. tech companies hiring workers in India, accusing them of prioritizing globalism over American workers. He specifically stated that “those days are over” for companies outsourcing jobs to India and other countries.

India’s IT and Business Process Management (BPM) industry, which generates approximately $245 billion annually and relies heavily on U.S. clients (about 60-70% of revenue), could face challenges. Policies such as higher tariffs (e.g., the 25% tariff on Apple products made in India, as mentioned in May 2025) or restrictions on H-1B visas could reduce demand for Indian IT services.

Major Indian IT firms like TCS, Infosys, and Wipro, which depend on U.S. contracts for software development, IT services, and back-office operations, may see a decline in business. This could lead to slower revenue growth, layoffs, or a need to pivot to other markets.

Trump’s broader trade policy includes imposing a 10% universal tariff on imports and a potential 60% tariff on Chinese goods, with specific criticism of countries like India for high tariffs (India’s average MFN tariff rate is 17%).

If the U.S. imposes retaliatory tariffs or trade restrictions, Indian tech exports, including software and hardware components, could become costlier. This might discourage U.S. firms from engaging with Indian vendors, particularly for hardware manufacturing or tech services.

Indian companies may face higher costs to maintain U.S. market access, squeezing profit margins. Additionally, U.S. tech firms with operations in India, such as those with R&D centers or manufacturing units (e.g., Apple’s iPhone production), may reconsider expansion plans in India.

The Initiative on Critical and Emerging Technologies (iCET), a key U.S.-India collaboration framework covering AI, semiconductors, and quantum computing, may face scrutiny under Trump’s administration. Reports suggest Trump may be less amenable to sharing advanced technology or encouraging U.S. investments in India compared to the Biden administration. Reduced U.S. investment in India’s tech sector could slow the growth of India’s semiconductor industry, AI development, and other high-tech areas. For instance, U.S. firms might prioritize domestic production over partnerships with Indian companies, limiting technology transfers.

India’s ambitions to become a global hub for semiconductor manufacturing and AI innovation could be delayed, forcing reliance on domestic investment or alternative international partners like the EU or Japan. 4. Trump’s stance on restricting U.S. citizenship for Indian tech workers and their families, coupled with potential reforms to the H-1B visa program, could limit opportunities for Indian professionals in the U.S. Indian tech workers, who form a significant portion of H-1B visa holders (about 70% of approvals), may face stricter visa regulations or reduced quotas. This could disrupt the flow of talent to the U.S., affecting Indian IT firms’ ability to deploy workers for on-site projects. Indian companies may need to focus on developing local talent or explore remote work models, while Indian professionals may seek opportunities in other countries like Canada or Australia, potentially leading to a brain drain.

How it could be good for India

Some analysts suggest that Trump’s policies could push India to abandon its reliance on providing programmers to Western companies and instead build its own tech ecosystem. Restrictions on outsourcing could encourage India to invest in domestic tech innovation, such as AI startups, indigenous software platforms, and manufacturing. The Indian government’s initiatives, like the Production Linked Incentive (PLI) scheme, could gain momentum to support local tech industries. While short-term disruptions are likely, long-term growth in India’s domestic tech sector could emerge, reducing dependence on U.S. markets and fostering self-reliance

Trump’s “America First 2.0” policy is described as transactional, which could strain U.S.-India ties if India is perceived as a high-tariff nation or a competitor in tech. However, defence cooperation and shared concerns about China may maintain some alignment. Indian tech firms may accelerate efforts to diversify into markets like Europe, Japan, or the Middle East to offset potential U.S. losses. For example, Infosys and TCS have already been expanding in Europe, which could cushion the impact.

While Trump’s statements signal a protectionist stance, their actual impact depends on policy implementation. His first term saw similar rhetoric, but practical outcomes were mixed due to economic realities and corporate pushback. For instance, U.S. tech giants like Apple and Microsoft rely on global supply chains, including India, for cost efficiency and talent. Completely reshoring operations may increase costs and slow innovation, as noted by industry insiders. Additionally, India’s strategic importance as a counterbalance to China may temper aggressive U.S. policies. The Indian government’s diplomatic efforts and ability to negotiate trade deals will be crucial in mitigating adverse effects.