Indian Prime Minister Narendra Modi has forged a solid bond with CEOs of influential U.S. tech giants. This alliance has not only bolstered India’s standing on the global stage but has also given Modi a boost ahead of upcoming elections.
The Promise of Growth
Amidst China’s slowing economy, many American CEOs recognize India’s potential for robust growth. The need to diversify manufacturing operations away from geopolitical rivals has further pushed U.S. conglomerates towards India.
“India’s strategic importance has increased due to the shift away from rival supply chains,” explained Manjari Chatterjee Miller, senior fellow at the Council on Foreign Relations.
Political Influence and Diplomatic Shield
The backing of these tech giants has also shielded Modi from scrutiny over India’s continued purchase of Russian and Iranian oil. As major economies sanction these nations, the endorsement from prominent companies helps deflect criticism.
“Apple’s move into India has played well for Modi, both economically and politically,” noted Pravin Krishna, a leading economics professor at Johns Hopkins University.
A Stream of Silicon Valley Giants
Ahead of India’s national election, Modi has engaged in ongoing discussions with top Silicon Valley executives. Tesla CEO Elon Musk is expected to visit New Delhi soon.
“The narrative around Apple, such a well-known brand, has benefited Modi, boosting the economy and providing political leverage,” said Krishna.
Investments and Lithium Reserves
To attract Tesla’s interest, Modi’s government reduced import taxes on electric vehicles for companies investing in local production. Tesla is also exploring India’s lithium reserves, a critical component for electric vehicles.
Apart from Tesla, Nvidia CEO Jensen Huang and Alphabet CEO Sundar Pichai have visited India to discuss collaborations in AI and other projects.
Challenges to Sustained Growth
Despite the influx of investment, Modi faces challenges in maintaining the momentum.
“Land and labor laws need urgent attention,” said Frank Wisner, former U.S. ambassador to India. “Making it easier to hire and fire workers, as well as acquire land, is crucial for U.S. businesses.”
Addressing Labor Shortage
India’s high youth unemployment rate requires attention. Training programs and policies aimed at strengthening the manufacturing base are essential for attracting and retaining foreign investment.
Bureaucratic Barriers
Modi must also address India’s bureaucratic hurdles and red tape to enhance the ease of doing business.
“Reducing bureaucratic obstacles and improving corporate governance will further enhance India’s reputation as an investment destination,” said Dinyar Devitre, advisory board member at General Atlantic.
International Investment Trends
Foreign direct investment (FDI) into India has witnessed a remarkable increase, from billion in 2014 to over billion in 2023. Conversely, China has seen a decline in investment.
India continues to attract capital from global investors, as evidenced by the .5 billion inflows this year, second only to Japan’s .5 billion. “India remains a compelling investment opportunity this decade,” stated Jitania Kandhari, Managing Director at Morgan Stanley Investment Management.
