One question that is frequently associated with Prime Minister Narendra Modi’s US visits and his camaraderie with President Barack Obama is this: Have Modi’s visits (Modi has visited the US four times and met Obama seven times) resulted in any tangible benefits to the Indian economy in the form of investments?
Experts to whom Firstpost spoke say Modi's visits have indeed been bringing investment into the country.
The USIBC had promised an investment of $41 billion in September 2014. Of this, $28 billion have already been invested in India, said USIBC Chairman John Chambers during his address at the USIBC CEO round-table in Washington on Tuesday. "This sum is ‘huge and positive," says Neelam Deo, director at Mumbai-based foreign policy think tank Gateway House.
Harsh Goenka, chairman, RPG Enterprises was 'delighted' to hear about USIBC’s additional commitment of $45 billion to India. "Modi is a man in a hurry and India Inc is indeed privileged to have someone like him with a vision and sense of purpose, for making India a global hub for manufacturing. India presents a haven of opportunity to the world."
Goenka said that India had many positives to make it a preferred destination for investors, primarily that the country presents a market of over a billion people, stable financial markets, a skilled workforce and investor-friendly policies. That Jeff Bezos would be investing an additional $3 billion in India taking Amazon’s total India investment to $5 billion, is proof that India is a 'preferred' destination for investors, Goenka pointed out.
Ikea has already invested €1.5 billion ($1.7 billion) in India, China's largest commercial real estate developer, Wanda has announced investments worth $10 billion in the country and Japan's SoftBank is betting big on the India growth story, upping it’s investment of $2 billion to $10 billion in the near future. "That’s the confidence and trust of the largest Fortune 500 companies,” said Goenka.
Usually, say experts, with regard to foreign policy announcements, the norm is to make billion dollar announcements in public, while only a small percentage of it gets invested. However, if going by what the USIBC chairman has said, a substantial amount of what has been promised has been invested in India. “A lot of this would have gone into the IT sector, as that is our largest export sector. Considering that industrial output in India has been declining in the past 15 months, exports have also been falling, this investment from the US means a lot to the country,” experts pointed out.
What is bureaucracy doing?
Modi’s role is of a chief salesman for the country — to promote the country and to encourage investment in India. It is the job of the bureaucracy to follow up on his visits and work on the formalities to help the flow of investments into the country, experts added.
“However, the bureaucracy is not as quick as the prime minister in getting investors interested in India with regard to their follow-ups,” said analysts, adding that the establishment is more focused on the US and it would be interesting to know if it is equally interested in driving investment from less attractive destinations such as Central Asia or Iran, for instance.
The visit of Modi to the US at this juncture with a few months left for Obama’s tenure to finish, should be seen as being done far more for consolidating and strengthening what has been achieved in his previous visits, said Nandan Unnikrishnan, vice-president and fellow, Observer Research Foundation.
Although a few reforms have been stuck on account of political party compulsions and many more have to be brought about to bring an avalanche of investment into the country, there has been a 'small' tweak in investment policies that has led to foreign investment into the country, said Unnikrishnan.
The much-debated GST and land reform bill are in a state of limbo. However, these are not hidden from the public eye and investors across the world know about it, said Deo. “The government is serious about GST and the land reform bill, but it is political parties that are stalling it. Investors know about that,” she said.
Going by newspaper reports, the government is working on GST and the land reform bill. Unnikrishnan said that FDI would only be a small fraction of the overall investments into business and what is of importance is to assure sentiment and comfort to Indian investors and industry, he said
India’s foreign direct investment went up to 42 percent since the government assumed office in May 2014, Commerce Minister Nirmala Sitharaman had said to PTI. She said while FDI dipped 16 percent globally, India continued to remain an attractive destination for foreign investors.
There are areas where marriages of convenience can take place between India and US.
Manufacturing for instance.
“This can’t be done at the old steam engine-pace,” pointed out Unnikrishnan. With robotics and advanced technology being the order of the day in the manufacturing industry, India needs to catch up with the rest of the world for which foreign investments in this sector would help, he pointed out.
Modi has done a lot to promote India, say experts and it has raised the image of India abroad. Unnikrishnan said that it would be unfair to compare Manmohan Singh and Modi simply because Singh was an elderly statesman who did not have the energy due to age and illnesses. “It is best to look back on Modi’s achievements after the tenure of his government. That would be a good time to pit his achievements with those of Manmohan”, said Deo.