In 2010, US President Barack Obama arrived in India with the largest-ever delegation of Amercian business leaders to any country.
Four years later, Prime Minister Narendra Modi on his maiden visit to the US, is set to hard-sell the story why India’s rising economy has never mattered more than before, as he seeks to reset business relationship between the world’s two largest democracies.
The fact that many global CEOs and top bankers of Wall Street have already met, or are expected to meet, Modi, is perhaps a sign of turnaround of India’s image as an investment destination.
While Indian-born Deutsche Bank co-CEO Anshu Jain called on Modi recently, Goldman Sachs CEO Lloyd Blankfein and PepsiCo CEO Indra Nooyi are among those who are expected to meet Modi during his visit to the US.
Mary Barra, the global CEO of General Motors, the world’s second-largest carmaker by sales and chairman Tim Solso also met the Prime Minister recently.
The meetings with global CEOs and influential bankers are clear signs that investors view the Modi government’s commitment on reforms and easing business environment as serious intent.
Modi is expected to hold discussions on, and possibly extract commitments from top companies, on investing and financing infrastructure projects such as smart cities, solid waste management and the cleaning of the Ganga.
Analysts are keenly watching for cues on investment figures that US companies may commit during Modi’s visit to invest in Asia’s third-largest economy that is showing signs of clawing back from its deepest slump in a quarter of a century.
“So far the governments have taken a piecemeal approach — but there now appears to be serious effort by the Centre and some state governments to revive the manufacturing sector,” Chetan Ahya of Morgan Stanley said in a recent research report.
Modi is expected to make a strong sales pitch about India as an investment destination, similar to Thursday’s launch of the “Make in India” initiative.
“This initiative will not only help make India a manufacturing hub but also make India’s economic growth more inclusive. The Indian diaspora is excited at the potential ahead,” said Robinder Sachdev, director, India affairs, US India Political Action Committee (USINPAC).
In last two years, global investors have been unsparing in their criticism about complex rules and bureaucratic red tape that delay in investment decisions.
From a foreign investors’ darling to a slowing economy prone to risky policy flip-flops, the turnabout of India’s image has been as rapid as the sizzling growth it had once peaked during 2004-08. India ranks a lowly 134 out of 189 countries in the World Bank’s ease of doing business index in 2014.
It slipped three places from its 2013 rank.
There are, however, signs of a turnaround in India’s image.
“Indian politicians are fond of such grandiose announcements, but in Modi’s instance it may have some substance,” Glenn Levine, an economist with Moody’s Analytics, a subsidiary of the global rating agency Moody’s, said in recent report.
During his five-day visit to Japan, his first bilateral trip outside the sub-continent, Modi, who shares a warm personal chemistry with his Japanese counterpart Shinzo Abe, managed to extract an FDI pledge of $35 billion spread over five years.
It is learnt that Modi will seek US technology and investments for setting up 100,000 MW each of solar and wind energy generation capacity in India over the next 10 years.
While industry leaders and analysts have long argued for pressing ahead with critical reforms, some of these need to be voted in law by Parliament, which may prove difficult hurdles to surmount.
Hiking the FDI ceiling to 49% from the current 26% in India’s rapidly-growing private insurance sector, a contemporary Direct Taxes Code and stitching together a common national market by rolling out the Goods and Services Tax or GST need legislative changes.