In New Delhi, the response to Trump's return has been cautious optimism mixed with nervousness. India's relationship with the Biden administration was genuinely strong—deepening Quad ties, semiconductor partnerships, defense cooperation. Trump's unpredictability suggests that settled agreements aren't guaranteed to remain settled. And Trump's transactional approach to foreign policy means that India's strategic value to the US, while real, is contingent on ongoing negotiation rather than permanent alignment.

The most immediate concern is tariffs. Trump campaigned on broad tariff increases, with particular focus on China. The question for India is whether it gets caught in cross-fire or benefits from Chinese goods becoming uncompetitive. The answer is probably both.

Indian textiles, pharmaceuticals, and specialty chemicals could gain market share if Chinese alternatives become expensive due to tariffs. Indian textile manufacturers have idle capacity and could shift production from Asian markets to US supply. Indian pharmaceutical companies, which already dominate US generic drugs and active pharmaceutical ingredients, might see pricing improve if Chinese generics become uncompetitive. This is real upside.

But Indian IT services face vulnerability. The sector depends heavily on US clients—roughly 60% of Infosys, TCS, and HCL Technologies' revenue comes from US operations. If Trump's tariffs slow US economic growth, or if his policies restrict hiring by foreign companies, demand for IT services contracts. That's margin compression in an industry already facing cost pressures.

The visa issue is more direct. Trump has previously criticized H1B visas as tools for displacing American workers and depressing wages. If his administration restricts H1B availability or increases visa costs significantly, Indian IT companies face real problems: they can't hire workers in the US, they can't cost-effectively relocate teams from India, and they lose competitive advantage. The result is margin compression and potential acceleration of the "remote work from India" model that reduces employment in America but also reduces revenue per employee.

What's less clear is whether Trump will use visa policy as leverage in negotiations or pursue it as principle. If he uses it strategically—offering visa access in exchange for trade concessions—India could negotiate. If it's principle, there's no negotiating room.

Beyond tariffs and visas, the larger strategic question is what Trump's transactional approach means for India's hedging strategy. For two decades, India has carefully balanced multiple relationships: deepening ties with the US, maintaining economic engagement with China, preserving autonomy on issues like Russia and Iran, developing partnerships with Japan, Australia, and others. This strategy has worked because major powers tolerated Indian independence as long as India wasn't actively aligned against them.

Trump's approach is less tolerant of ambiguity. He prefers explicit commitments, formal alliances, transactional clarity. India's refusal to explicitly choose against China, its engagement with Russia, its reluctance to align completely with Quad positions on all issues—these might frustrate a Trump administration seeking clear allies and clear enemies.

The semiconductor sector offers potential cooperation points. Both US and India want alternatives to Taiwan manufacturing. A facility where US companies establish fabs with government support in India could serve US strategic interests while helping India's ambitions. Trump might view this pragmatically as good for business and good for US security. This is one area where interests genuinely align.

But the broader relationship will require India performing a diplomatic high-wire act: deepening US partnership while signaling independence, seeking trade benefits while protecting sensitive sectors, supporting Quad positioning on most issues while maintaining the strategic ambiguity that allows India to engage with other powers.

India's stated strategy is engagement through economic value and shared strategic interests (terrorism, maritime security, China's rise), while avoiding explicit anti-China positioning or formal military commitments. This is rational but may not be what Trump wants to hear. Trump prefers clarity. India prefers optionality.

The risk isn't that the US-India relationship sours but that it becomes more transactional and less strategic. Each negotiation becomes a bargaining session rather than an assumption of shared interests. Defense cooperation continues but requires explicit quid pro quo. Trade benefits are extracted but with political costs.

For India, the strategy is to deliver value through semiconductors, technology, defense partnerships, and economic growth, while maintaining enough flexibility to preserve other options. This isn't ideal but is probably the best India can manage given the structural asymmetry in the relationship and Trump's unpredictable approach to foreign policy.