How Does Joe Biden's Victory Impact the Indo-US Trade Corridor From a B2B Startup Perspective?
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This US election result was highly anticipated globally. Much has been said about the Joseph Biden victory and the impact it will have around the world. Various sectors and industries will have profound implications. The Indo-US trade corridor in particular would have significant implications with Joe Biden in power, especially pertaining to B2B startups.
Biden’s economy would shift focus towards a green economy and will consider climate change seriously. The Biden administration is likely to have a very different approach to climate change and this could benefit India in terms of funding and other ties linked to sustainable energy. This will give a push to the sustainable energy space and Indian startups that focus on renewable energy, efficient energy and sustainability will have a significant scope. The Indian B2B startups space is already marching towards creating a sustainable environment with multiple startups focusing on air and water quality, reduction in environmental waste, reduction in power consumption, etc. The Barack Obama-Biden administration also helped persuade India to sign on to the Paris Climate Accords and made clean energy and climate change cooperation a big part of the US-India partnership. This will only be further taken forward and established with the plans of Biden.
Along with the sustainable energy startups, startups in India that are focusing on technology enabling people to work remotely will have a significant upside. Technology is gaining rapid advancement especially when the pandemic hit and new-age technology is gaining immense traction across the world. The sector will receive an impetus with Biden’s approach and make technology accessible to all. Another significant difference is the H1-B visa programme which will most likely be opened up by Biden. This is a substantial lifeline for the Indian tech industry.
Biden’s administration will also be focused on COVID-19 recovery nationally and globally. The plan will be reinstituting ‘pandemic control’measures anticipating and preparing for detecting and avoiding the next pandemic. Startups in contact tracing, tracking, testing, health data sharing, and the ones focusing on health-tech will have a significant tailwind. Beyond this, bio/biotech startups focused on the virus and other pathogen identification, drug discovery, precision medicine and other forms of bioresearch will have significant focus as well. This will also extend to startups in medical devices, distribution, and data collection.
The Indian pharma sector is also expected to benefit from the Biden presidency on the back of an increased push for generic prescriptions and access to affordable health insurance. This implies more reliance on generic drugs and biosimilars that would be good news for Indian drug companies. US imports almost $7 billion worth of formulations from India annually, making it one of the most important sectors in the US healthcare system. Recently, once the COVID-19 pandemic struck, the US sought huge quantities of key antibiotics from India. In the short term, COVID-19 mitigation strategies are expected to take center stage.
Another major difference is Biden’s student debt forgiveness. The cost of education is one of the major reasons young Americans are struggling with student loan debt. “The Biden Plan for Education Beyond High School” seeks to solve that problem. This should bring in a serious renaissance in education and the business of education. Startups especially in ed-tech will have a significant upside.
Biden’s strategy will be building international coalition and less of trade wars which will shift the manufacturing focus to India in the near future. This can be a substantial boom for India especially in high tech manufacturing and pharma sectors. Indian startups should be prepared to take advantage of this opportunity. The US, India, Japan and Australia have formed the Indo-Pacific Quadrilateral Alliance, and this is a legacy that the 46th President of the US is likely to strengthen. Contrary to the dissemination of perceptions that he is an apologist for the China, Biden is known to keep the US interest as his main focus. In such a context, the chances are high that the signing of the defence and security Foundation Agreements will pave the way for major defence manufacturers in the US to set up some of their production facilities in India, so that they can more effectively compete in costs with the competition that will soon come their way from the Sino-Russian alliance. In such a scenario, the Government of India has to ensure that 100 per cent ownership be permitted in defence rather than 75 per cent. A similar welcome can be extended to US tech companies so that they source production in India.
The flow of funds and India as a desirable place to invest has more to do with India policies and value proposition and has got less to do with who is in power in the US. Indian equity markets are considered to be lower priced than many of the other emerging economies. Indian startups are already a big part of “alternative investment strategy’ as US interest rates remain low and US stock markets are touching an all-time high, Overall, as the economy recovers in the US post COVID-19, India will continue to emerge as a great place to invest.