What Modi’s Brand India Brought Home
Prime Minister Narendra Modi’s whirlwind tour of 53 countries across six continents in the course of four years was primarily aimed at repositioning India on the investment map of the world. It came in the wake of a long spell of indecisive diplomacy during the second term of the United Progressive Alliance government. Emerging India perhaps lost the watershed moment because of its sluggish approach to international relations.
Modi’s National Democratic Alliance (NDA) government went about repositioning India as a hot and viable investment destination. It wooed global investors to India in a bid to kickstart the next phase of industrialisation. The mission resulted in a marathon tour of foreign climes, like the United States, United Kingdom, Japan, France, Germany, the Netherlands, Singapore, Russia, United Arab Emerites (UAE), China and Mauritius, among other nations.
The US, UK, Japan, France, Germany, the Netherlands, Singapore, Russia, UAE and China are the top ten investors in India in terms of Foreign Direct Investment (FDI) as of December 2017. With Mauritius, India enjoys the Avoidance of Double Taxation Treaty, which no doubt facilitated the massive inflow of $40.56 billion worth of FDI during the 2015 and 2016 calendar years, which is an all-time high.
The BW Research Bureau crunched some numbers to examine the tangible gains from the Prime Minister’s tour of the top ten nations in terms of FDI inflows. In a graphical display on Page 32, we have compared FDI inflows from these top ten nations in 2013 and 2014 (the last two years of UPA II tenure) with those in 2015, 2016 and 2017. We also talk of the bilateral agreements that fructified during the period and their significance.
Brand India
“Where I think PM Modi has made a very big difference is that he has linked foreign policy directly to India’s economic interests,” says Rajiv Kumar, economist and author. Numbers corroborate the assertion. Every diplomatic visit abroad has translated into economic benefits for India, which does indeed make Narendra Modi seem like a Prime Minister with an agenda.
“Prime Minister Modi has made very good attempts to bring in confidence and (place) brand India as an investment destination,” says Pawan Kumar Nerella, Director, International Association of Business Communications, India Chapter (IABC). Nerella is associated with various such projects abroad. “However be the branding of the country, he could not convert the opportunities due to various internal and external factors,” says Nerella, adding, “While concentrating on the Far West and the USA, he neglected the neighbouring countries and China has taken the space”.
He does not dwell on the political ramifications of cross-border trade. It goes without saying, though, that more cross-border trade would have opened up opportunities for Indian investors and added heft to India’s bilateral relations with neighbours.
Hard statistical data on FDIs from each country confirms a significant jump in investments between the 2015 and 2017 calendar years, compared to that of the two preceding calendar years of 2013 and 2014. Foreign Direct Investment from the US for instance, jumped three-fold from $ 2,435 million in the calendar years 2013 and 2014 to $ 8,659 million in the calendar years 2015, 2016 and 2017.
The Tangibles
Japan is among the major donors to India, apart from being a top investor. Inflows of FDI from Japan was $ 3,756 million in 2013 and 2014, but soared to $ 9,224 million in the ensuing three calendar years. It is pertinent to also highlight the Nuclear Civil Co-operation agreement with Japan and its long-term gains. The programme could take India’s nuclear programme to the next phase.
Another major and significant jump in FDI flows occurred from the UAE. Equity inflows from the UAE in 2013 and 2014 was a meagre $563 million. In the three ensuing calendar years and close on the heels of the Indian Prime Minister’s visit to oil-rich kingdoms and the diplomatic bonhomie that ensued, FDI inflows from the UAE soared to $2,408 million.
In the wake of Modi’s trips to Saudi Arabia, UAE, and Qatar to woo investors, the $500 million Chabahar port deal was signed with Iran. Modi also set the stage for economic cooperation with Israel. Apart from investments and purchase of critical military hardware, Israel will offer India advance inputs for agriculture. Israel has set up 15 centres of excellence across India.
Statistics on Russia may not seem too exciting at first glance. It is pertinent to remember, however, that ONGC Videsh, a subsidiary of public sector oil and gas behemoth ONGC, acquired a 15 per cent stake in Rosneft’s Vankornet Oil Fields during the period under discussion (2015-2017). Foreign direct investment from Germany, the Netherlands, Singapore and France too have increased – if not significantly - to a sizable extent, during the period.
Our chart brings forth some interesting facts too. Most of the investment from China for instance, is being routed to India via Hong Kong and the investment from China is heavy. The visits have also resulted in the signing of several trade pacts, establishment of a framework for enhanced security, border defence and space cooperation. The enabling environment for investment came through flagship campaigns like Digital India, Make in India, Clean India and Skill Development.
Critics say a lot more needs to be done. The World Bank has espoused the view that opening up of all sectors of the economy needs to be expedited. “Economically, out of 100, Modi has achieved 40 per cent in the foreign policy, if we put in the percentage,” says Nerella.
Circumstantial evidence, though, links the sheen in Brand India as a destination for investments and collaborations with Modi’s wanderlust. The hustle and bustle, signing of deals and shaking of hands occurred during a spell in which India jumped 30 places at one go in the World Bank’s Ease of Doing Business index.
