Here’s why Trump 2.0 policies can put Indian IT in a quandary. Tariffs, inflation, rate cut halt may shrink spending

When Donald Trump first took office in 2017, Wipro became the first Indian company to flag a US president as a business risk. According to ET Prime, Wipro’s annual filing with the U.S. Securities and Exchange Commission (SEC) raised concerns over Trump’s policy stance, noting that his tariff and trade decisions could negatively impact their business in America.

In its SEC filing, Wipro noted that Trump’s policies posed risks to their investments in the U.S. healthcare sector. ET Prime reports that in 2016, Wipro acquired Healthplan Services for $500 million, betting on the success of the Affordable Care Act (ACA) enacted under President Obama. However, Trump’s efforts to repeal the ACA created uncertainty, delaying the anticipated benefits of the acquisition.

As per ET Prime, the U.S. election outcome introduces further challenges for Indian IT. Although Trump’s first term primarily impacted visa policies, it also affected corporate budgets and project decisions. Industry executives now worry that his second term could disrupt budgets again. An executive from a top-tier IT services company told ET Prime, “This year was already slow for decision-making and budgets. The election has just added more uncertainty.”

After Trump’s initial win, the National Association of Software and Services Companies (NASSCOM) publicly expressed optimism about U.S.-India tech collaboration. However, as per ET Prime, Indian IT firms began increasing their lobbying efforts in Washington to address policy challenges, particularly regarding visa issues.

Over the past few years, Indian IT firms have adapted by hiring more local employees in the U.S. The ET Prime highlights that companies like Infosys and TCS have dramatically increased U.S. hiring, with Infosys employing over 25,000 American workers. LTI-Mindtree recently opened a new office in Houston, Texas, underscoring the sector’s commitment to the U.S. market despite the policy uncertainties.

Trump’s proposed 20% tariffs on all imports, with even higher rates on Chinese goods, are a major concern. Retail clients of Indian IT firms are closely analyzing how such tariffs might affect their budgets and consumer prices. “Even in retail, IT budgets are not making it to the to-do list,” said an executive quoted in the report, pointing out that discretionary projects may face delays.

Trump’s tariff policies could also impact the U.S. Federal Reserve’s stance on interest rates. ET Prime quotes a Mumbai-based analyst who suggests that inflation from tariffs might halt rate cuts that IT firms rely on to spur spending. “2025 was supposed to be the year the Fed continued to cut rates and discretionary spending returned,” the analyst said, noting that the election results have cast doubt on this outlook.

As U.S. policies remain uncertain, Indian IT firms like Wipro, Infosys, and Cognizant will closely monitor the potential for policy changes in the healthcare, retail, and banking sectors, which account for over a third of their revenues.