Senior politicians and business titans descended on Indian Prime Minister Narendra Modi’s home state yesterday to pay homage to the man they count on to unleash big-bang reforms and create one of the few bright spots in a troubled world economy.
Big business cheered Modi when he won India’s strongest election mandate in 30 years in May last year, and he has caught its attention with eye-catching initiatives like a “Make in India” campaign complete with lion logo.
Now, the 64-year-old leader has ramped up the Vibrant Gujarat jamboree he founded as the state’s chief minister in 2003, turning it into a pitch to put his nation of 1.25 billion people, most of them poor, firmly on the investment map.
Photo: AFP
“India is marching forward with a clear vision to become a global power, even as most of the world is struggling with low growth,” the country’s richest man, Mukesh Ambani, told an audience of hundreds of chief executives and politicians.
US Secretary of State John Kerry led a roll call of leaders, including UN Secretary-General Ban Ki-moon and World Bank president Jim Yong Kim, converging on Modi’s hometown of Gandhinagar for the three-day Davos-style bash. US President Barack Obama is to visit India later this month.
Yet, eight months into Modi’s rule, the failure of Asia’s third-biggest economy to emerge from its longest growth slowdown in a generation is raising questions about how much substance there is behind Modi’s promise of “red carpet, not red tape.”
His Make in India drive has drawn comparisons with the manufacturing miracle that turned China into the world’s second-largest economy, outstripping India’s economy fourfold since 1980.
Sceptics argue that India’s competitive strengths are not in making and exporting things, but in areas like information technology and business process outsourcing where it is a world leader.
Vibrant Gujarat, held every two years, has yielded billions of US dollars in investment promises, but only a fraction of the deals announced has come to fruition.
In keeping with tradition, Ambani said his Reliance Industries conglomerate would invest a huge 1 trillion rupees (US16.1 billion) in its home state of Gujarat over the next year to 18 months. He gave no details, but Reliance has embarked on major expansion.
“There is an air of optimism in the air of India,” said Sam Walsh, CEO of global mining giant Rio Tinto, who flagged two potential projects: a US$2 billion iron ore project in Odisha state and an investment in Madhya Pradesh that could employ 30,000 diamond-cutters.
Modi needs investors to put their money where their mouths are to lift stagnant capital investment that has held back India’s growth to 5.3 percent.
That is expected to accelerate this year to 6.4 percent, said the World Bank’s Kim, who called India a “bright spot” in an otherwise gloomy global economic landscape.
That would still be short of the 7 to 8 percent India needs to create work for the 1 million people who join the workforce every month.
Modi has made headway on making it easier for outsiders to invest more in real estate, insurance and defense, but a rigid labor market and rotten infrastructure are huge deterrents.
India slipped to 142nd out of 189 in the World Bank’s latest Doing Business Index. Modi wants India in the top 50.
“Investors want credibility, stability and at the same time flexibility. Right now, India is a bit of an inflexible market,” said Kilbinder Dosanjh, a director for Asia at Eurasia Group, a geopolitical risk consultancy.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure