Corporate law firms and institutional brokers in India are being inundated with calls from their clients about dealing with the fallout of new laws under the Trump administration in the US. Law firms and brokers dealing with institutional clients told businesslinethat the discussions with their clients are centred around dollar borrowings, trade, immigration, tax and regulatory matters.
There are overriding concerns that the America-first focus that US President Donald Trump is advocating could result in a lot of investments flowing into the US, which could result in further pressure on the rupee. Dollar borrowings for India firms may become dearer in rupee terms. The changes in citizenship laws have also created uncertainty with regard to immigration.
“Clients are thinking through their external commercial borrowings and ways to manage the next round of fundraising. Currently, US borrowings are competitive relative to rupee borrowing, but whether that window will continue to remain open is uncertain,” said Bikash Jhawar, Senior Partner, Saraf and Partners.
HEDGING TERMS
While a lot of borrowings are hedged, hedging terms are dynamic and change with the external environment, added Jhawar.
Clients are seeking guidance on navigating possible increased tariffs and export restrictions that could arise under a renewed Trump administration, as well as how to handle the potential deportation of illegal Indian migrants, and changes in citizenship laws affecting families who are waiting citizenship.
“There are concerns from technology firms and immigration consultants, with possibility of changes in US citizenship laws affecting children born to Indian nationals,” said Kunal Sharma, Partner, Singhania & Co.
India’s IT and IT-enabled services sectors may face increased costs if the new US administration imposes restrictions on immigration and citizenship. Although Trump has said that he is in favour of H-1B visas, there are still concerns about its potential restrictions in the future.
“Such restrictions could limit workforce mobility. Indian firms may need to allocate more resources toward hiring locally in the US, potentially increasing operational costs and impacting margins,” said Vikram Kasat, Head – Advisory, PL Capital.
Legal issues
Some law firms may set up teams to address legal complexities given the spate of executive orders passed by the US President.
“ Protectionist trade measures, including tariffs, have had a direct impact on Indian exporters and US-based Indian firms. Multinational corporations have relied on our expertise to create customised strategies for compliance, visa management and workforce relocation,” said Sindhuja Kashyap, Partner, King Stubb & Kasiva, Advocates and Attorneys, which has expanded its capabilities to address the current challenges effectively.
According to Pl Capital’s Kasat, Indian pharmaceutical exporters could face tighter regulation, tariffs, or increased competition from US-based manufacturers given the Trump administration’s push to bring jobs back to the US and adopt more protectionist trade policies.
The brokerage is working on adopting a conservative investment strategy and staying away from high-beta stocks which tend to be more volatile and riskier.
pointers
India firms doing a rethink on fundraising as dollar borrowings become expensive
Clients seeking guidance on navigating possible increased tariffs and export restrictions
Changes to visa regulations have raised concerns for IT firms
