Google CEO Sundar Pichai listens as Indian Prime Minister Narendra Modi speaks during a meeting with senior executives and CEOs from American and Indian companies at the White House on June 23, 2023 in Washington, DC. ) and Apple CEO Tim Cook.
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Many American CEOs have come to support Mr. Modi’s policies, as they see promise for further economic growth in India as China’s economy slows.
Tensions between the United States and China have also led American conglomerates to spread their manufacturing operations across countries, including India, to avoid disruption from potential conflicts.
“By shifting supply chains away from our rivals, India becomes a very important linchpin,” Manjari Chatterjee Miller, senior fellow for India, Pakistan and South Asia at the Council on Foreign Relations, told CNBC.
Support from major US companies will protect Prime Minister Modi from criticism of India’s continued purchase of Russian and Iranian oil while most major economies have imposed sanctions on Russian and Iranian oil. It is also useful.
Ahead of the election, experts told CNBC that Apple’s expansion into India in particular is giving Mr. Modi political clout and generating more investment interest among U.S. companies.
“The Apple story, which has such a high profile, worked in Mr. Modi’s favor. It not only helped the economy, but also gave him political clout,” said Chung Ju Yong, distinguished professor of international economics and business. , says Pravin Krishna. Johns Hopkins University.
As India’s national elections begin, Prime Minister Modi has established ongoing dialogue with Silicon Valley’s leading CEOs.
The election will conclude in early June, with more than 960 million people expected to vote. Opinion polls predict that Prime Minister Modi’s Bharatiya Janata Party will win.
Indian Prime Minister Narendra Modi (right) talks with Elon Musk (left) in New York, USA on June 20, 2023. (Photo courtesy of Press Information Bureau of India (PIB)/handout/Anadolu Agency, Getty Images)
Press Information Bureau of India | Anadolu Agency | Getty Images
Tesla CEO Elon Musk is scheduled to head to New Delhi next week. Ahead of Musk’s visit, the Modi government cut import taxes on electric vehicles for manufacturers that invest $500 million to set up production centers in India. The move is clearly of interest to Tesla.
The two leaders last met in June in New York, where Musk brought up India’s high import taxes, the people said. After Musk’s one-on-one meeting with Modi, he said he hopes Tesla will build a factory in India soon.
But Tesla’s aspirations to expand in India go beyond just making and selling electric cars. Tesla is also interested in learning more about India’s lithium reserves, which are expected to be discovered in 2023, two people told CNBC. As electric cars grow in popularity, a shortage of lithium, a key component in EVs, has sparked an arms race among manufacturers around the world.
Mr. Modi’s ties with American companies have grown exponentially in the past 18 months, as tensions between the United States and China have led Western countries to look to India for opportunities.
Nvidia CEO Jensen Huang flew to India in September to meet the prime minister and discuss ways to work on artificial intelligence projects. During his visit, Huang unveiled plans to partner with India’s Tata Partners and Reliance to build the country’s AI infrastructure.
During Prime Minister Modi’s state visit to the White House in June, Alphabet CEO Sundar Pichai, Apple CEO Tim Cook, AMD CEO Lisa Su and others attended a roundtable discussion. , discussed opportunities to collaborate with India on artificial intelligence.
Prime Minister Modi has some major hurdles to overcome to allow American companies to continue investing in India.
“Land law and labor law are at the top of the list,” former U.S. Ambassador to India Frank Wisner told CNBC.
Current Indian laws make it difficult to hire and fire workers and buy land, which could pose problems for U.S. companies looking to expand.
If re-elected, the Modi government will also be tasked with reducing India’s high youth unemployment rate of 44% and implementing training programs to strengthen the country’s manufacturing base, Miller added. Experts told CNBC that it could become difficult for U.S. companies to continue expanding in India unless the fundamental problems hindering India’s growth are resolved.
Dinyal Devitre, an advisory board member at General Atlantic who has served on several public boards: “If this happens, India’s reputation as a place to do business could further accelerate.” Altria, Kraft Foods, SABMiller and IHS Markit told CNBC.
Money is flowing in now. According to Visual Capitalist, foreign direct investment in India has steadily increased from $36 billion in 2014 to over $70 billion in 2023. During the same period, investment in China declined.
Dave Mazza of Round Hill Investments said ETF data shows investors continue to allocate capital to India. So far this year, India has received only $2.5 billion in inflows, second only to Japan’s $3.5 billion. At the same time, nearly $1 billion flowed out of China.
“India remains one of the most attractive growth and investment destinations of this decade,” Jitania Kandari, managing director at Morgan Stanley Investment Management, told CNBC. Kandari acknowledged that valuations are high, but added that “revenues are catching up.”
