One thing that singularly defined Prime Minister Narendra Modi's high voltage US visit was the open courting of American capital and his efforts to alter the narrative about India as an investment destination. In his individual and collective meetings with business leaders in New York and Washington, he pledged to take a series of steps in the coming months to ease doing of business in India. Modi told them to invest in India before the queue became too long.
And he appears to have succeeded in persuading this weary but important group of interlocutors to transfer capital, technology and best practices as part of their investments in India. All indications emanating from the country are that his interactions are going to translate into several deals.
"India has the potential to be on a very different development trajectory" under the Modi-led government, says Ajay Banga, chairman of the US-India Business Council, which has identified over $41 billion of investment in the next two to three years. And that's based on a survey of just 20 percent of members of the USIBC, which would meet on October 9 to discuss India's growth prospects under Modi at its annual Leadership Conference.
That India is back on the agenda for investors can also be gauged from the words of other corporate head honchos. "I deeply believe that he's committed to changing India," said Caterpillar's Douglas Oberhelman after meeting Modi. Boeing CEO James McNerney said the company would accelerate its engagement with India. "We've got folks who are firming up travel plans," gushed Assistant Secretary of State for South Asian Affairs Nisha Desai Biswal during a media briefing.
Foreign direct investment from the US has fallen in the last four years as India's economic growth slowed and investors were disappointed by the previous government's failure to make key policy changes. Many US companies now expect there will be a better business climate in India as Modi has promised to "implement and enforce all parameters of ease of business". They see long-term opportunities in sectors like infrastructure, defence and aerospace.
Modi understands that global capital is critical to remaking the Indian economy, especially in developing its infrastructure and transportation network. He has his sights on export-oriented manufacturing FDI, says political scientist Sonal Pandya of the University of Virginia, that creates skilled jobs and introduces advanced technologies without intensifying local competition, given the sharp political division in India over FDI in sectors like multi-brand retail.
Over the years, India has lagged behind in exporting value-added manufactured goods. It has not been able to raise its share of techno-intensive products. For example, in comparison to what moves between its neighbour China and the US, India's trade in goods and services with America is miniscule. It reached $93 billion in 2012, which compares poorly to China's $579 billion during that period. Modi's move to boost manufacturing is now expected to see a big jump in Indian exports to the US.
And that explains the strong business content in his foreign policy moves in recent months. The subject figured also in Modi's talks with President Barack Obama and the two leaders pledged to set up an Indo-US investment initiative to raise investment by corporate entities and institutional investors. They agreed to establish an Infrastructure Collaboration Platform to raise participation of US companies in infrastructure projects in India.
The private sector in the US holds huge investible resources. It owns and incubates an array of technologies that are of immense use in India's development process. The Obama administration has welcomed India's offer to the US industry to be the lead partner in developing three smart cities in Ajmer, Allahbad and Visakhapatnam.
Modi's engagement with the US business community is in recognition of its political outreach and role in shaping Washington's external policies. Policy wonks point out how the spread of American commercial interests in China has created an interdependence that acts as a balancing force in times of geopolitical tensions between the two powers.
In the US-India context, the private sector along the Indian diaspora played an important role in the signing of the nuclear deal. In the 1990s, the "India Interest Group" of leading companies had helped New Delhi block anti-India resolutions on Kashmir and Punjab in the US Congress.
So far the American businesses have been asking Congress and the Obama administration to impose punitive measures on India for its policies, especially those on intellectual property rights, trade and taxation. Most of these issues are yet to be resolved. But there seems to be a shift as they share the enthusiasm and vision of Modi about the road ahead for the two countries. Modi has been able to turn them into an ally in his quest for a new India.
(Saroj Mohanty is a journalist and commentator. The views expressed are personal. He can be contacted at firstname.lastname@example.org)