Ever since Narendra Modi took on the office of the Prime Minster of India in May, he has been on a diplomatic mission, meeting leaders from Japan, the U.S., and China. Having been denied a US visa for 12 years, he finally arrived on September 28th. The ban was rescinded after Obama formally extended an invitation to Modi to make US-India relations a “defining partnership” for the 21st century. Modi gratefully accepted this invitation, hoping his visit would impart “new momentum and energy” to the strategic partnership between the two countries.
US-India relations have had a mixed record. India sided with the Soviet Union during the Cold War while America supported Pakistan. These ties were further weakened when the U.S. government added India’s name to a watch list of countries perceived to be encroaching intellectual rights. In recent days, India has also threatened to derail a WTO deal that aims to reform trading rules until the organization addresses the concern about the government’s stockpiling of food aimed at feeding its poor. Despite a fivefold growth since 2000, trade between the two countries only totals $96bn, falling far short of Washington’s expectations. This can be attributed to frustration caused by “India’s anti-foreign business” policies under Manmohan SIngh.
However, Modi is determined to reverse that trend. Standing true to his vows of economic reform, he has already made it easier for foreign businesses to get permits to make business investments . However, according to the World Bank, India ranks 134th in the list of business-friendly countries. To pacify its critics and allow for fast-paced economic growth, India needs less red tape and better safeguards for investors that are wary of Indian firms breaching drug patents. They also need to curb retroactive taxation and loosen the rein on labor laws.
From his recent talks with the United States, it is clear that Modi is probing all resources to boost India’s economic growth. He met with the Council on Foreign Relations (CFR), a think tank, to seek solutions for effectively cutting domestic red tape. He also delivered a rock-star style speech at Madison Square Garden to mobilize American-Indians to “join hands to serve our mother India.”
India’s “success as a powerful democracy would help to transform the greater South Asian region while serving as an objective constraint on growing Chinese power,” said Ashley Tellis, a former U.S. India policy official, commenting on United States’ recently developed interest in India’s economic growth. Clearly, in addition to economic benefits for themselves, the U.S. is looking for an Asian ally in their economic war against China.
However, Washington might be in for a shock, as Modi is not completely on board with the “rebalancing Asia” policy just yet. Earlier this month, he managed to secure a $20bn deal with China and $33.6bn deal with Japan to improve infrastructure, create jobs, and make investments in the country. He has also joined hands with the other BRICS countries – Brazil, Russia, China and South Africa – to create a $100bn development bank in Shanghai. Even during Xi Jinping’s recent visit to India, he systematically downplayed the border-dispute to focus on strengthening the ties for economic development and investment.
Modi is carefully calculating each of his moves; he wants nothing to obstruct his “India First” vision. He is seeking to bolster ties between all countries that India’s former leaders have ignored in order to get the wheels of the domestic economy turning. Now, the question is whether all these efforts can deliver the results he has been promising India’s youth, and whether he can fully mobilize India’s potential. But for now, he appears to be the savior India severely needs.
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