Hard sell at Davos
Prime Minister Narendra Modi will have his big day at the World Economic Forum in Davos today. It’s partly about the optics, of course—his delivering the opening address and being the first Indian prime minister to attend the event since H.D. Deve Gowda in 1997, for instance—but mostly about the hard sell.
According to the department of industrial policy and promotion, foreign direct investment (FDI) inflows to India grew 9% in 2016-17. This might seem creditable, but it was a steep decline from the previous two years—27% growth in 2014-15 and 29% in 2015-16. Also, the Reserve Bank of India noted last week that Mauritius was the largest FDI source in 2016-17, raising the possibility that at least some of the inflows were due to round-tripping.
The Modi government has taken several steps in the past year to liberalize FDI and address the twin balance sheet problem—relevant in the light of inflows trending towards mergers and acquisitions, as per Unctad. Now, it remains to be seen how successful Modi is in selling his message that India is open for business.