Rock star Modi needs more business-friendly riff

September 29, 2014

By Kate Duguid

The author is a Reuters Breakingviews columnist. The opinions expressed are her own. 

Indian Prime Minister Narendra Modi used his headline gig at Madison Square Garden to make an emotional sales pitch on Sunday morning. His suggestion that Indian-Americans invest freely in their ancestral land was met with wild cheers from the capacity crowd. But even for a politician with a rock star’s popularity, the country’s business-unfriendly reputation remains a formidable obstacle.

Modi has chosen his target well. His five-day U.S. tour is unlikely to lead to the kind of multibillion-dollar deals he recently signed with Japan and China. His government’s decision to stall a World Trade Organization agreement on harmonizing customs standards has irked corporate America. Before their members loosen their purse strings, lobby groups want U.S. President Barack Obama to press Modi to remove barriers to freer trade in everything from agriculture to pharmaceuticals and telecoms.

Instead of seeking the buy-in of big business for his recently launched “Make in India” campaign, Modi appealed to the Indian-American community to invest in “our motherland.” In return, he promised a lifetime visa for anyone able to prove Indian origin.

But it will take more than a relaxed immigration policy to crowd-source investment dollars. A severe power shortage and inadequate transport infrastructure dim India’s appeal as a destination for labour-intensive manufacturing. A “doing business” rank of 134 among 189 economies covered by the World Bank doesn’t help, either.

Modi gets the challenge. “Ease of business” would be a priority, he said, promising the Indian-American community that there would be “no more running from pillar to post to deal with the government.” Nor would he repeat previous governments’ folly of “making one law after another.” Fulfilling those promises, though, will take an equal commitment from stodgy state governments – getting them to change their tune will be the real test of Modi’s business-friendly riff.

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