Creating Strategic Balance In Asia
Prime Minister Narendra Modi may not be admired at home in all circles, but undoubtedly he is India’s most powerful messenger abroad. Which is why his decision to go to Davos, and the opportunity he had to address the opening plenary and reinforce India’s credentials under his leadership as the prime partner today for foreign investors, was most opportune, especially in the context of current international developments at political, economic and security levels.
That India is in the eyes of global CEOs at the fifth place in terms of the most attractive destinations for foreign investment and China is at number two is already an achievement. This should be looked at relatively though. The US, Germany and the UK have long been prime destinations and China has attracted such an enormous amount of foreign investment for three decades or more that the commitments made will remain self-generating for some time to come, especially as the Chinese economy continues to grow respectably. India has had to work hard to change international perspectives about it as a prized investment destination because of criticism that it has been slow to reform its economy, has avoided big bang reforms, especially those covering the financial and labour sectors, and that the access to the Indian market was still restrictive, not to mention policy implementation shortfalls on the ground. India-US frictions in the World Trade Organization, America’s enduring issues with India on Intellectual Property Rights and patent laws, and India’s perceived foot-dragging in the Regional Comprehensive Economic Partnership negotiations, have also impacted India’s reputation as an investment-friendly country.
However, the positive aspects of the India story have overshadowed these negative elements. India’s growth has picked up again, with the IMF projecting it at 7.4 per cent in 2018 and 7.8 per cent in 2019, positioning it as the fastest growing large economy in the world. Moody’s has upgraded India’s credit rating. The GST has been introduced, and demonetisation — whatever its criticism internally and externally by established economists — reflected the risk-taking determination of a strong and confident leadership to attack the black economy and widen the tax base. Modi’s signature campaigns such as Digital India, Skill India, Make in India, Startup India and steps taken to ease doing business — with India jumping 40 places in World Bank’s global rankings — have contributed to the message of an India that is modernising itself.
Most importantly — and this is the message Modi also delivered at Davos — India’s growth ambitions do not threaten the rule-based international order, as China’s ambitions do. The US is now openly censuring China for its predatory economics and acknowledging that China has become a strategic competitor, a view that opens space for India, which is now seen as a key partner for a strategic balance in Asia. Europe too has begun to express concern about lack of economic reciprocity by China, reflected in French President Emmanuel Macron’s statements during his recent visit to China. Modi spoke out in favour of globalisation, as did Chinese president Xi Jinping at Davos last year, with the difference that China sees globalisation as a means to use the strength of the West against it, while India sees it as being in the world’s collective interest. Modi spoke out against protectionism too, echoing wide-spread concerns in the developing world and beyond that too about “my country first” approach.
Modi’s performance at Davos was brilliant indeed. He delivered his message convincingly, with confidence, with sobriety and without partisanship.
