The real culprit is President-elect Donald Trump’s anti-offshoring policy. Trump’s 100-day agenda talks about ending the Offshoring Act. He also talks about levying a 35% tax on companies that shift their production outside the US. This affects the Indian IT companies directly.
Visa rules could become tighter too, making it difficult for Indian IT companies to service their US clients. However, we foresee only a short-term effect. “Once he takes over the Oval office, the businessman in him shall surface as he is the not the only one calling shots as his advisors will guide him through the info overload and definitely good sense will prevail in him.
Trump, in the past, has spoken about maintaining a strong relationship with India to woo businessmen and students. Plus, he himself has business interests in India. This could mean a prospering relationship with India. Moreover, Trump indicated he wants to curtail trade with China and clamp down on Pakistan. This could help Indian businesses as well as its defense interests. Thus all is not lost for IT stocks with election of Trump as a USA President and do remember to check the likely Indian sector going to benefit with Trump in chair here.
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