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Modi paves way for flow of funds in defence, oil, new energy

By Shivaji Sarkar

Prime minister Narendra Modi meant business. That is what the US visit was about. He did not conceal that either as he told the packed crowd of the US corporate leaders.

He was candid. He said, “I am business-minded. I know businessman is not a donor. He’s not here for charity. A businessman has to make his profits. He must get a return for his investment. I’m in favour of that”.

He pledged red carpet instead of red tape to have their investment as India has to go a long way.

He demonstrated a diplomat in himself, who could talk on an even keel with US president Barack Obama. The decision of Obama to have interlocution with Modi not on one but two occasions and his gesture of impromptu visit to the Martin Luther King memorial was significant. It came soon after Modi spoke of G-All and not G-One at the UN.

Would these steps mean business for India? Would it change the biz confidence in the country? There are positive signs. Despite the statistics of development not moving up, it has filled the countrymen, in India and abroad, with a rare confidence. The nation is abuzz that they have got a person, who can lead them. The way he engaged Obama was in sharp contrast to what the nation looked at disdainfully when the US president put his arms around an elderly Indian prime minister a few years back.

For Modi it was just not Indo-US business. It was beyond that. The US showed that it took Modi and certainly India seriously on terrorism in Pakistan and the Chinese belligerence in South China Sea, where Indian oil interests are involved, the two issues raised by Modi at the UN General Assembly. The US imposed sanctions on Pak-based terror outfits Harkat-ul-Mujahideen and Lashkar-e-Toiba, which target India.

Further collaboration on Afghanistan and anti-India Pakistan-supported terrorism is likely. National Security Advisor Ajit Doval has stayed back to work that out. The move is an initiative to ensure not only safety of the people but also of Indian investments.

The US has shown willingness to develop three smart cities Hindu pilgrim centre Allahabad, sufi pilgrim shrine Ajmer and the pride of the south Vijaywada. It also wants to partner on digital India initiative, set up infrastructure collaborations, extend an Indo-Pacific economic corridor to Myanmar, Southeast Asia and identify critical ports, rail, aviation, inter-modal infra projects. It all means possibilities of immense investments.

His various moves and style of governance has got deep support from RSS chief Mohan Bhagvat during his annual significant Vijayadashmi address. There was a bit of caution too. Bhagvat wants the nation to cut down on imports, increase exports and be self-reliant. It was a sober advice on having deluge of foreign investment. Bhagvat has also given a call to virtually socially boycott Chinese imports obviously to boost Indian manufacturing.

The government may have to tailor its investment policies to suit the national needs. Modi is certain to change the face of the country by creating a manufacturing hub. He has now possibly to balance it with FDI and indigenous investment. His cajoling of the non-resident Indians, in New York, is clever ploy to encourage the PIO investments. Much of it remains in the country and not repatriated.

His promise to both PIOs and US corporate leaders to smoothen the Indian systems is essential to create the biz climate.

Many a time Indian leaders have made promises of single-window clearance in the past, but ultimately investors found them in a maze of rules. It was not long when the state of UP had signed, at least thrice, in the past 15 years, MoUs with Indian and foreign investors to the tune of Rs 54,000 crore. Little came.

The country no more wants promises but a clear road to investment. Would the US corporate invest in this country? At least some like the General Motors, who have invested to build an automobile hub are happy. Among various areas, it is expected that India may have large US investments in oil sector and defence. Indian defence manufacturing requires wings and with US technology and production in the country, though yet to be finalized, it may equip India with a rare opportunity to export arms and weapons. The investment is likely to be in billions of dollars.

The US proposal to set up a defence university should be seen having greater import than mere investment.

Joint mission to better understand climate change impacts is likely to pave a closer cooperation. India has been having its first climate studies with the US on Monex – monsoon experiment – in 1960s. It unraveled many secrets on monsoon movement. It has helped reorganize the Indian meteorological department, which now does near accurate forecasts. World’s largest Thirty Meter Telescope project (TMT) is significant. Such missions do not bring in large investments but pave way for long-term business.

The proposed MoU between US Exim Bank and the Indian renewable energy department may ensure $ 1 billion US Exim Bank funding for import of made-in-America, a favourite Obama mission, of renewable energy goods and services in India.

It is yet not known whether technology would also be available. India would have to match it with strong non-grid power research system to free the people from large corporate oriented high-cost power system.

As of now it is not easy to fathom the extent of investments. The intent is deep. Fund managers from India and abroad expect improving sentiments and impressive returns from Indian markets to help attract billions of dollars flowing into the country’s asset management industry.

Reliance Capital Asset Management CEO Sundip Sikka has said that his meetings with many investors show that they are bullish on India and willing to invest.

India, however, has to do a lot. India has the capacity to emerge from the morass provided it ensures an easier legal and tax framework and better conditions for the working class. The aim of Modi is antyodaya but it requires labour laws that can ensure an honorable treatment to the working class.

If the developments go in the intended direction, it might lead to a continuous flow of investment.

 

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