India’s Prime Minister, Narendra Modi, has cultivated strong relationships with CEOs of major U.S. tech companies, giving his nation the foreign support it has been seeking for over a decade. This support has not only boosted Modi’s profile but also provided a significant advantage ahead of key elections. Many American CEOs are backing Modi’s policies due to the promise of further economic growth in India as China’s economy slows. Additionally, tensions between the U.S. and China have led conglomerates to diversify their manufacturing bases, with India becoming a crucial linchpin in this process.
The support from major U.S. companies also shields Modi from criticism regarding India’s continued purchase of Russian and Iranian oil, despite sanctions imposed by most major economies. Apple’s expansion into India, in particular, has given Modi political clout and generated increased interest among U.S. companies for investment opportunities. The presence of such a prominent company has not only helped the Indian economy but also enhanced Modi’s political standing.
Modi has been engaging in ongoing dialogues with influential Silicon Valley CEOs as India’s national election gets underway. The election, which will conclude in early June, is anticipated to involve more than 960 million voters, with polls suggesting that Modi’s Bharatiya Janata Party is likely to emerge victorious.
Tesla CEO Elon Musk is planning to visit New Delhi soon, prompted by the Indian government’s decision to reduce import taxes on electric vehicles for manufacturers investing $500 million to establish production centers in India. Tesla’s interest in expanding in India extends beyond manufacturing and selling electric vehicles. The company is also keen to explore India’s lithium reserves, which were discovered in 2023. With the increasing popularity of electric cars and the scarcity of lithium, Tesla is eager to secure a reliable supply.
Modi’s relationship with corporate America has grown significantly over the past 18 months as tensions between the U.S. and China have prompted Western countries to seek opportunities in India. In September, Nvidia CEO Jensen Huang visited India to meet with Modi and discuss collaborations on artificial intelligence projects. During this visit, Huang announced plans to partner with India’s Tata Partners and Reliance to develop the country’s AI infrastructure. When Modi made a state visit to the White House in June, several CEOs, including Sundar Pichai (Alphabet), Tim Cook (Apple), and Lisa Su (AMD), attended a roundtable to explore AI opportunities with India.
Despite the strong support from U.S. companies, Modi faces significant challenges in attracting further investment. Land and labor laws, which make it difficult to hire and fire workers and acquire land, pose obstacles for U.S. businesses seeking expansion. If Modi’s government is reelected, it will also need to address India’s high youth unemployment rate of 44% and implement training programs to strengthen the country’s manufacturing base. Failure to resolve these underlying issues could hinder U.S. companies’ continued expansion in India.
Currently, foreign direct investment in India is on the rise, reaching over $70 billion in 2023, up from $36 billion in 2014. In contrast, investment in China has declined during the same period. ETF data indicates that investors are still allocating capital to India, with inflows amounting to $2.5 billion this year. India’s attractiveness as a growth and investment destination for the current decade is acknowledged by Jitania Kandhari, Managing Director at Morgan Stanley Investment Management. Though valuations may be high, earnings have remained strong, making India a compelling opportunity.
In conclusion, Prime Minister Narendra Modi’s strong ties with CEOs of major U.S. tech companies have provided crucial foreign support for India and bolstered his own profile ahead of key elections. American CEOs are attracted to Modi’s policies due to the promise of economic growth and the need to diversify manufacturing bases away from China amidst geopolitical tensions. However, Modi must address challenges such as labor and land laws and high youth unemployment rates to ensure continued investment in India. Despite these obstacles, foreign direct investment is increasing, making India an attractive growth and investment story for the current decade.
