After a landslide victory for Republican candidate Donald Trump in the US Presidential elections, all eyes are on how the Trump 2.0 administration will deal not only with geopolitical issues but also the US trade relations and investments in India.

For India, Trump’s previous stint as President led to what some might call stronger relations between the Indian government and US policymakers. With India’s prime minister Narendra Modi being one of the first leaders to congratulate Trump on his victory, pundits expect a similar trajectory of diplomacy between the countries.

In the past four years, when Trump was not in the Oval office, India has seen its domestic business landscape grow exponentially primarily due to the Indian startup ecosystem gaining steam. For perspective, the country’s startup ecosystem has grown from just a mere 450 startups in 2016 to a whopping 1.4 Lakh in 2024.

A key factor behind this growth has been capital from US-based hedge funds, VCs and private equity players. In the last year of the previous Trump administration, the US Federal Reserve adopted the low interest rate and then zero interest rate fiscal policy to boost economic activity during the pandemic. This led to several major US investors loosening the purse strings and backing Indian startups in a big way.

For context, Indian startups netted over $42 Bn in 2021. However, the momentum subsided as the US Federal Reserve increased the interest rates to curb inflation in the country. The past two years have been relatively calmer after the storm of 2021.

Will the Trump 2.0 administration reverse this trend? Investors Inc42 spoke to are optimistic that India could once again see a big swing under Donald Trump.

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