Modi Hits a High Note in the US, Now for Action

Convincing American corporates to invest in India will be one of the tough challenges for Modi, writes Deep Pal.

As the first Indian Prime Minister ever to visit the Silicon Valley, Narendra Modi has spent the weekend with the biggest names in the tech business. From touring the Tesla headquarters with the maverick CEO Elon Musk to being flanked by India-born tech CEOs including Google’s Sunder Pichai, Microsoft’s Satya Nadella and Adobe’s Shantanu Narayan at a Digital India event; to a town hall meeting with Facebook’s Mark Zuckerberg welcomed by thousands of Indian-origin employees, Modi has left no stone unturned to make his, and India’s, presence felt in the world’s tech capital.

This follows his earlier meetings in New York with leaders of over 40 major financial and manufacturing companies – dubbed as the $4.5 trillion club, referring to their collective net worth – who he invited to bring their business to India.

If Modi’s previous visit was to showcase the emergence of a political leader who had just won a landslide victory, this visit has been about the leader who knows it is now time to fulfil his promises. Little wonder then that on finally taking the stage before the 18,000-strong crowd of Indian Americans at the SAP Center in San Jose, he asked the crowd to certify if his performance has been up to par.

Show Me the Money

• Modi’s recent visit to the US hinged on the fact that it’s time now to deliver
• Lot of homework has been done prior to Modi-Obama meeting
• Dialogue on cyber issues suggests newer priorities
• Many in the US administration hinted disappointment at the slow pace of reforms in India
• Corporate America is looking for concrete action on reducing red tape and opening up certain sectors

Modi-Obama Meeting

The two sides have been working on this meeting for the last few months, and the first US-India Strategic and Commercial Dialogue (S&CD) held at the cabinet level last week, has helped it. The dialogue agreed on new initiatives including a high-level consultation between Foreign Secretary S Jaishankar and the Deputy Secretary of State Antony Blinken. A new ‘Track 1.5’ dialogue on cyber and internet matters suggests newer priorities are being focused on and there is a willingness to work together on global issues. A separate joint declaration on countering terrorism also underscores continued concern on the issue.

Obama recently brought up these contentious issues in his meeting with Chinese President Xi Jinping without much success. The necessity of freedom of navigation in the seas near China resonates with both India and the US. In their previous meetings, Modi and Obama have talked about making the Indo-Pacific region safer, and this conversation is likely to continue.

Explaining Slow Domestic Reforms

Once the conversation turns to economic relations, Modi might find he has some explaining to do. In recent months, members of the US administration, the military, the legislature as well as industry have expressed disappointment at the pace of reforms which fell short of the promises made last year. Ahead of the S&CD, senior lawmakers from both parties wrote to Secretary of State John Kerry expressing displeasure at India’s trade barriers, licensing laws and inadequate protection of patents.

Around the same time, at a public event with External Affairs Minister Sushma Swaraj and Commerce and Industry Minister Nirmala Sitharaman in attendance, the US Secretary of Commerce, Penny Pritzker, pointed out India’s outdated bankruptcy regime, delay in resolving contractual disputes, and the extremely low ease of doing business. Earlier the US Under Secretary of Defence for Acquisition suggested that the low FDI limit in the defence sector could be a hindrance in transferring technology to India.

Keeping the Magic Alive

None of this is to say that the US business or administration is giving up on India. What it does mean is that there is a certain degree of fatigue in merely talking about the huge potential of India-US relations and not see it reach fruition. The message from the Indian government of keeping the big picture in the India-US relationship in sight instead of a merely transactional association notwithstanding, corporate America will invest only to the extent that India’s economic fundamentals allow.

Narendra Modi’s unprecedented mandate last year on promises of economic reform and subsequent rejuvenation of bilateral relations, in stasis during UPA-II, had raised expectation to an unsustainable level. A year later, the disappointment at not seeing rapid and comprehensive domestic reform, therefore, is commensurate to this excitement.

The best way for the Indian PM to grab American imagination, therefore, will be to find creative ways of engaging the US in the coming months. After their New York meetings, CEOs lauded Modi’s inclination to ask for, listen to and accept advice. Concrete action that corporate America is looking for immediately includes reduced red tape, and opening up of various sectors to greater foreign investment, starting with the defence sector. Between New York and Silicon Valley, Modi has met the best innovative minds that the US has to offer. Now, it is upon him to creatively utilise their interest to India’s benefit.

(Deep Pal is a PhD student at the University of Washington, Seattle.)