Indian PM Modi seeks investments in India’s infrastructure and the BGBF was the place to start

The Bloomberg Global Business Forum (BGBF), which is held in New York, traditionally, in the third week of September, when the high-level United Nations General Assembly takes place, is proving to be an effective platform for world leaders to address the top representatives of America Inc.

Comparisons between the BGBF and the World Economic Forum (WEF), Davos, Switzerland, become inevitable: both events have their charm, appeal and, also, drawbacks. While the WEF is a far bigger and internationally established venue located in the picturesque snow-capped Alpine region, it seems to be bursting at the seams, with participants sometimes “looking lost” and struggling to maintain the overview of their objectives as delegations of high-ranking dignitaries, senior government officials, experts and business leaders descend on Davos for a couple of days in January. 

The BGBF, by comparison, is smaller in size but offers greater compactness, affording the participants an opportunity to talk serious business and get their message across to the gathered business leaders. 

Courting America: India Comes a Calling

That the BGBF is evolving into an effective platform to court America Inc., was demonstrated by Indian Prime Minister Narendra Modi who as the keynote speaker at this year’s BGBF held on September 25, made a strong investment pitch, harping on the virtues of India’s “4 Ds” – democracy, demography, demand and decisiveness – that would greet U.S. investors in India.

Modi’s address at the BGBF was a slight shift from the original script:  the broad theme at the BGBF was climate change but the Indian Prime Minister dwelt on what he called the “golden opportunities” awaiting U.S. corporations interested in doing business and investing in India.  The Bloomberg group’s chief executive and founder, Michael Bloomberg, sitting next to Modi, moderated the conversation with the Indian Prime Minister, extracting information about India’s reform course that would interest U.S. investors. 

While the highly-publicized “Howdy Modi” rally held earlier in Houston, Texas, which attracted over 50,000 guests - President Donald Trump also attended it – was, essentially, a display of support from the burgeoning Indian diaspora, the BGBF turned out to be an important business event where Modi could address CEOs and others representing a wide spectrum of industries.

Sprinkling his speech with metaphors –  the speech was delivered in Hindi amid an occasional burst of English - to highlight investment opportunities for U.S. companies, Modi said that this was “only the beginning”, adding that “today’s India is in a unique position.  If you want to invest in a market where there is scale, come to India. The Indian government respects the business world and wealth creation.”  India, offers, as Modi put it, a “very business-friendly environment”. 

Investment in India

Modi spoke of two new initiatives to be taken to strengthen India’s investment base and make it attractive for international investors: Bloomberg is going to partner with India for inclusion in global benchmark indices and building up a financial services sector in Gujarat - Modi’s native state of which he was the chief minister before becoming the Prime Minister.

Modi emphasized in the keynote address that India was taking steps to push the pace of growth, and maintained that India’s economy, currently slightly less than $ 3 trillion, would touch the $ 5 trillion target by 2024, even though some see this as “unrealistic”. “To achieve that target in the next five years would require India’s economy to grow at 11% to 12% annually,” one Indian businessman, preferring to remain anonymous, told the American Journal of Transportation at the BGBF.

To reach the $ 5 trillion goal, Modi spoke about linking laws, rules and governance to a global benchmark and thus strengthening the confidence of the world to invest in India. “In the coming years, we are going to invest $1.3 trillion on modern infrastructure,” Modi said in his address. The infrastructure development will include modernization of roads, railways, ports and airports, but also concentrate on “clean energy” which will mean gradually moving away from the pollution-contributing coal used for energy production.

There has also been some skepticism expressed in U.S. financial circles about the slowdown in India’s economic growth – the country’s economy is expected to grow at 6.1% this year, down from 9% a few years back – but there is also optimism over the future growth potential inherent in the country which, thanks to its burgeoning middle class, continues to attract investor interest. Modi pointed out in his speech that his government had cut corporate tax – this has been, generally, well-received in U.S. business and government circles - from 30% to 22%, but taxation on new investments funneled into manufacturing would be even lower, falling from 25% to 15%.

The new tax structure enhances India’s appeal as an investment destination that can offer competition to other countries, notably Indonesia, Vietnam and other member states of the Association of Southeast Asian Nations (ASEAN) that are vying for a share of the money flowing out of China following the US-China trade war.

The Indian prime minister said that his government had abolished some 50 laws that were outdated and not conducive to growth. And, as said earlier, he emphasized that this was “only the beginning”, promising there will be “much more to come in the future”. “India is waiting for you. India is the only destination for you,” he declared.

Climate Change

Modi did speak, eventually, on climate change and attributed the slow pace in replacing coal as a source of energy – India uses coal to produce some 72% of the country’s electricity, even as India’s Power Ministry has targeted reduction of coal burning to 50% by 2030 - to India being denied entry into the Nuclear Suppliers’ Group which consists of uranium suppliers around the world. Because of its exclusion from the NSG, India is not able to get a steady supply of uranium to enable it to reduce its dependency on coal. India has been knocking at the NSG door for some time, but it has not gained admittance to the club thanks to objections by China. The NSG has 48 member countries. The Indian Prime Minister was responding to a question by Bloomberg as to when India could reduce the burning of coal. Modi said that India has the potential to create a “new environmental model for the world” if it had access to NSG fuel.

As a contribution to reducing the impact on climate, Modi observed that India intends to achieve 450 gigawatts of renewable power capacity in the “near future” and is ahead of schedule in implementing a more immediate goal of 175 gigawatts capacity from solar, wind and biomass.

India, China and the U.S. together generate some 50% of the global carbon dioxide emissions.