India-US investment: Howdy, Biden, it’s India here

Narendra Modi and Joe Biden met yesterday. The Covid-wracked world has brought enormous new challenges to both India and the US, bringing home a stark realisation of why staying together on multiple issues is essential for the prosperity of both countries. What are some of the low-hanging fruits with respect to investments and related areas?First, the US’ direct position abroad in 2020 was at $6.15 trillion (Rs 454.2 lakh crore), of which India got $41.9 billion (Rs 3.1 lakh crore, as compared to $124 billion, or Rs 9.2 lakh crore, that went to China). China has suddenly taken a turn towards ‘more equity’ at home, which poses a significant threat to US investments there. Using brute State power, Xi Jinping has effectively castrated Alipay, DiDi and Tencent, among others. Beijing has also put government officials on the boards of these companies.In fact, there is talk of nationalising DiDi, the world’s biggest ride-hailing company. If Beijing now decides to forcibly delist, or take over, its US investor shareholding, that would have Uber rubbing its hands in glee, while DiDi investors such as Tiger Global and SoftBank despair. Edtech, luxury companies and technology giants lost billions of dollars in market value by the time they figured out that Xi meant business when he spoke of ‘common prosperity’. Thus, US companies would need to figure out alternatives, and India should position itself at the head of the table during Modi’s US visit.This poises India deliciously to go on an overdrive with the Fortune 500 companies to manufacture more in India. Already, about 400 of them do their R&D and back-office analytics here. But the elusive objective has been to get the US make things here. Vietnam today routinely exports $30-35 billion (Rs 2.2-2.6 lakh crore) worth of mobile phones every year. India, in comparison, stand at $2-3 billion (Rs 14,769-22,154 crore) — despite having one of the largest mobile phone factories in the world.For most mega investments, the challenges are three-fold: land, incentives and approvals. A PMO-led empowered team, alongside the concerned GoI secretaries and, say, five state governments (where clusters for specific industries exist) should reach out to these companies. Why can’t the leadership of Gujarat, Karnataka, Maharashtra and Tamil Nadu, for instance, go with GoI and pound the doors of Tesla or First Solar with their respective mega investment offerings, including draft agreements and contracts, which can be modified after negotiations with each company? It can’t be done by an ‘Invest India’ campaign alone. After all the glitzy presentations are over and done with, real business can’t be left to the mercy of our bureaucracies or local political leadership.Second, for the first time in decades, India has chosen to send the right signals to investors by offering an attractive hassle-free settlement to ongoing litigations with Cairn, Vodafone et al. Another stellar signalling effect would be for the dialogues in the US to put at rest all the issues around the equalisation levy (EL). This should be clarified loud and clear, to say it does not extend to the import of physical goods or actual provision of services (electronically signed contracts and payments included). Instead, the message should clearly state that EL is confined only to the supply of digital goods and services. This would go a long way in assuaging the frayed nerves of foreign investors in the US.Third, if US immigration allows pre-boarding clearance to passengers in Abu Dhabi and Ireland, the same can be extended to Bengaluru and Mumbai. This will be a boon for techies and corporates who wouldn’t have to wait in queue in the US on arrival. Reciprocally, India could consider Indian immigration clearance in ‘hubs’ such as San Francisco, Houston and New York, which will greatly benefit Indians coming to India. This is a simple gesture that can enhance goodwill and help people in both countries.Investors usually say that the biggest risk for anyone is not to be in China. But given Beijing’s recent efforts, many US investors could well be reconsidering their positions. India should position itself as a friendly alternative to fill the gap, while assuaging investors about genuine concerns they have about India. Make no mistake -- there are no long lines waiting to rush into India, as we would like to believe. India needs to build that line, through sustained, careful positive aggression to attract investors.

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