Indian prime minister Narendra Modi’s Davos address highlighted his country’s differences with China, but outsiders still have concerns over India’s investment climate.
Early in 2018, Indian prime minister Narendra Modi became the second consecutive Asian head of state to open the World Economic Forum, after Chinese president Xi Jinping’s momentous 2017 speech in defence of free trade while US president Donald Trump was pushing his ‘America First’ agenda.
Mr Modi followed in Mr Xi’s footsteps, highlighting the risks of rising protectionism in what could be interpreted as a dig at Mr Trump’s isolationist agenda. Mr Modi lamented the creation of new trade barriers, and that trade agreements are coming to a standstill. Ironically, on the same day, Mr Trump was due to sign into law new tariffs on solar imports, while Canadian prime minister Justin Trudeau announced the Trans-Pacific Partnership will be signed without US participation in March.
It is true that India has been opening up and is simplifying business practices, as highlighted by Mr Modi. In 2016-17, the volume of FDI entering India hit a record $43.5bn. The new goods and services tax is India’s biggest tax reform in its 70 years of independence. But red tape, accountability and transparency remain key concerns for many investors.
Mr Modi’s speech – two decades after the previous Davos visit by an Indian head of state – was historical. It underlines that developing countries will be key in defining the fate of globalisation at a time when protectionism and populism are taking a number of developed markets by storm.
But it also made clear that resolving international disputes to build a more equitable globalised system is no easy task. Mr Modi himself bemoaned multilateral organisations’ failure to represent developing countries’ needs. India also has historically bumpy relations with China, the other Asian power defending free trade. In his speech, Mr Modi frequently highlighted India’s democratic political system, which stands in sharp contrast to Beijing’s one-party government.
Mr Modi repeatedly stated that a diverse but united India should be taken as an example in overcoming cross-border differences. His own party, however, is often accused of promoting Hindu nationalism at the expense of local religious minorities.
