Narendra Modi completed his first 100 days in office in style: By inking a $34-billion investment agreement with his Japanese counterpart -and Twitter buddy - Shinzo Abe.
But the pact also offers clues about the Indian prime minister's broader growth strategy. He will cut similar deals with China and other countries. In return for investment dollars and local jobs, he will buy their equipment.
Modi has plenty of opportunities to test out his strategy. Chinese President Xi Jinping and Australian Prime Minister Tony Abbott will visit India this month, and Modi will fly to Washington towards the end of September for a summit with US President Barack Obama. While the agreement with Japan may be the most ambitious of India's commercial accords, there is ample scope for the investment-hungry economy to absorb capital from other countries.
The Indian government remains strapped for cash, while involving the domestic private sector in building roads, industrial zones and power plants has led to stretched corporate balance sheets, unfinished projects and a mountain of bad loans in the banking system.
Those problems have presented Modi with an opportunity. He can welcome foreign investment in infrastructure - and give equipment orders to companies from countries making the investment. There won't be much pushback from Indian tycoons, who are more interested in discovering Indian clones of Alibaba and Facebook than in competing with the likes of Mitsubishi, ABB and General Electric. These global engineering companies will welcome a respite from anaemic demand in the West.
But there will be challenges. Modi will have to cut bureaucratic red tape, streamline taxation and improve India's investment climate. His track record of running a business-friendly government in the state of Gujarat gives cause for optimism.
The 'Tokyo declaration' that Modi and Abe signed on September 1 will be watched closely. If it is implemented well, and leads to more such accords, global companies winning business in India will also push for the country to be included in trade blocs like the proposed Trans-Pacific Partnership. In that event, Japan's $34 billion investment in India could end up having a far bigger value than either country currently anticipates.
But the pact also offers clues about the Indian prime minister's broader growth strategy. He will cut similar deals with China and other countries. In return for investment dollars and local jobs, he will buy their equipment.
Modi has plenty of opportunities to test out his strategy. Chinese President Xi Jinping and Australian Prime Minister Tony Abbott will visit India this month, and Modi will fly to Washington towards the end of September for a summit with US President Barack Obama. While the agreement with Japan may be the most ambitious of India's commercial accords, there is ample scope for the investment-hungry economy to absorb capital from other countries.
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Those problems have presented Modi with an opportunity. He can welcome foreign investment in infrastructure - and give equipment orders to companies from countries making the investment. There won't be much pushback from Indian tycoons, who are more interested in discovering Indian clones of Alibaba and Facebook than in competing with the likes of Mitsubishi, ABB and General Electric. These global engineering companies will welcome a respite from anaemic demand in the West.
But there will be challenges. Modi will have to cut bureaucratic red tape, streamline taxation and improve India's investment climate. His track record of running a business-friendly government in the state of Gujarat gives cause for optimism.
The 'Tokyo declaration' that Modi and Abe signed on September 1 will be watched closely. If it is implemented well, and leads to more such accords, global companies winning business in India will also push for the country to be included in trade blocs like the proposed Trans-Pacific Partnership. In that event, Japan's $34 billion investment in India could end up having a far bigger value than either country currently anticipates.