Modi-Trump meeting: What investors are watching for on February 13

Modi-Trump meeting: What investors are watching for on February 13

As Indian Prime Minister Narendra Modi gears up for his meeting with U.S. President Donald Trump on February 13, 2025, investors will be watching closely for signals on trade, economic policy, and bilateral ties—factors that could strengthen or challenge India’s position as a growth market with relatively low geopolitical risk. The discussions could have implications for sectors such as manufacturing, defense, and IT services, which are sensitive to US policy shifts.

Market participants weigh in on the potential outcomes and key areas to watch as the meeting unfolds.

1. Tariff war and China Plus One: One key area of focus in the Modi-Trump meeting will be tariffs, particularly in the context of U.S. protectionist policies and India's evolving trade strategy. With Trump’s “America First” stance, there are concerns about potential tariff hikes on imports, which could impact Indian exports, particularly in sectors like pharmaceuticals, textiles, and IT services. However, India’s recent reduction in import duties on certain US goods may help ease tensions and prevent a full-blown trade conflict. Bhavik Thakkar, CEO of ABans Wealth & Investment Managers says, "India has already reduced duties on several US exports, which may help mitigate potential tensions over tariffs.” Investors will be watching whether Trump pushes for further trade concessions from India or if the meeting leads to a more balanced approach, potentially opening opportunities in sectors where India can serve as an alternative to China in global supply chains. "The global realignment of supply chains has allowed India to become an emerging competitive alternative to China. The sectors that are benefitting include electronics and automotive components. Conversations around accelerating this trend will be keenly watched," Thakkar highlighted.
2. Defense equipment procurement: One of the key areas for discussion is likely to be defense procurement, wherein Trump has been pushing on higher exports for the U.S. defense. Vikas Gupta, CEO & Chief Investment Strategist at Omniscience says, “Any arrangement where we see more U.S. investment in India’s defense sector that could not only enhance bilateral ties but also create growth opportunities for Indian companies will be good for Indian markets, especially defense stocks."
3. Chinese dumping: India’s manufacturing sector faces challenges, particularly from Chinese dumping—the practice of selling goods below market value to gain market share. Hemant Shah, Principal Officer at Seven Islands, argues that this creates an uneven playing field for Indian manufacturers who struggle to compete with Chinese prices. This could be a likely push for further discussion on taking concrete steps to align global trade practices in a way that could avert dumping of Chinese goods. Thus, boosting manufacturing in India.
4. India’s competitiveness in IT and Pharma: India’s “Make in India” initiative emphasises FDI in to the country, while Trump’s protectionist policies prioritise US-centric investments. While these two visions diverge, certain sectors, particularly India’s IT sector and pharma are vitally important for the US, according to Gupta. Ensuring that these sectors do not face hurdles in terms of regulatory wrath (for pharmaceuticals) and ease of doing business (with respect to visas etc for IT companies) will be important to watch out for.
5. Dollar Vs local currency settlements: Trump has historically been vocal about policies that could weaken the US dollar’s dominance. With BRICS expanding and discussions on trade settlements in local currencies gaining traction, the US may seek reassurances from India that it will not fully align with the de-dollarization push. Washington may want clarity on whether India intends to scale up non-dollar transactions with Russia and China, especially in energy and defense procurement. Thakkar said, “Any significant developments in this area could impact both currency markets and broader economic strategy.”