U.S.-Indian economic relations have long been heavy on promise and light on performance. U.S. officials and business leaders are hoping the visit of new pro-business Indian Prime Minister Narendra Modi to Washington this week will change that dynamic and boost trade and investment between the world’s two largest democracies.
Mr. Modi won election in May largely on the strength of his record in boosting economic growth and investment as chief minister of Gujarat, and many Indians hope he will bring the same dynamism to the nation’s economy as a whole.
“We have never before seen an Indian prime minister’s visit to the U.S. be so highly business-oriented and so packed with meetings with the U.S. business community,” said Ambassador Susan G. Esserman, a former deputy U.S. trade representative who now sits on the board for the U.S.-India Business Council.
Indian stock markets have been trading at near-record highs this month, in part, analysts say, because of the buildup of the prime minister’s first trip to the U.S.
Mr. Modi will focus on enhancing manufacturing, infrastructure development and attracting foreign investment to create jobs during his visit to the U.S. U.S. firms could see large investments in defense and military equipment, according to Lisa Curtis, a senior research fellow at The Heritage Foundation, as the election manifesto of Mr. Modi’s Bharatiya Janata Party’s (BJP) discussed India’s need to improve the country’s armed forces.
While U.S. ties with rival China have expanded exponentially, the U.S.-India relationship lagged badly for most of the last half-decade due to India’s previous administration’s reluctance to deregulate and open up the economy. U.S.-China two-way trade totaled more than $562 billion, almost ten times the volume of U.S.-India trade.
“I think both sides share a common purpose, and it’s to get the relationship moving again,” said Ms. Esserman.
While high hopes surround Mr. Modi’s visit, which will include an Oval Office meeting with President Obama Monday, there is some hesitation about whether or not he will be able to get reforms through the legislature. The BJP is weak in India’s upper house of parliament, currently holding just 42 of 243 seats of the seats. However, before the end of 2016, 10 states will hold elections, and the BJP is not the incumbent in any of those states. In six of these states in the recent elections, the BJP and its allies won over 50 percent of the seats.
Additionally, Mr. Modi has yet to establish a working relationship with President Obama during his short time in office, although several top Cabinet officials have visited New Delhi in recent months. The new Indian leader also faces sky-high expectations from voters while having to deal with India’s famously slow-moving bureaucracy.
“He’s been in office for four months now, and we’re still waiting to see some concrete movement with regard to economic growth and reform,” Ms. Curtis said. “Everyone expects that he’ll be taking these steps, but we have yet to see any major steps.”
Mr. Modi will visit New York and Washington while he is in the U.S., meeting with Mr. Obama and other government leaders, business groups and the Indian-American community. This will be Mr. Modi’s first visit to the U.S. after being denied a visa by the Bush administration over reports that he failed to prevent, and possibly abetted, the Hindu mob assaults on Muslims in Gujarat in 2002.
The U.S. isn’t the only country interested in the potential of a revitalized Indian economy.
Chinese President Xi Jinping made a three-day visit to India earlier this month, and Mr. Modi also made a trip to Japan to help bolster bilateral economic ties. Each country announced billions of dollars in investments in India.
“I assume that the dialogue [Mr. Modi] had with the Chinese a couple of weeks ago should be indicative of what he expects to get out of the trip to the United States as well,” said Suresh Shenoy, executive vice president of Northern Virginia-based IMC Inc., an information technology firm.
There is clearly potential for expanded investment to and from the Indian government. Mr. Modi brings a dramatic change in approach that could be the key to economic growth, according to Ms. Esserman.
Mr. Modi has a packed agenda for his Washington trip, with highlights including a sold-out rally Sunday with Indian-Americans at New York’s Madison Square Garden expected to draw over 18,000 people and a policy address to the U.S.-India Business Council in Washington on Tuesday.
• Mark Pace can be reached at mpace@washingtontimes.com.
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