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Canada’s 22nd Prime Minister, The Rt. Honourable Stephen Harper gives his insights on the emergence of India
Despite a multitude of political and business risks, India is emerging as an international power through recent dramatic domestic economic reforms and the emergence of a stable majority government in recent elections. The credit for this belongs to the dynamic leadership of Prime Minister Narendra Modi, who in almost four years, has taken bold steps to route corruption, formalize the economy and be rewarded by Indians in recent state elections with control of the upper house of Parliament, the Rajya Sabha (States’ Council).
Modi’s India aspires to great-power status and is clearly on the path towards realizing this goal. The Modi Government has a clear view of its key geopolitical allies, including the United States, Russia, Japan and Canada – countries seen as having mutual interests with India. Modi’s statesmanship from the onset of his administration has been robust, focussing on evolving the country’s traditional Cold War non-alignment into a series of strategic alignments focussed on the country’s economic performance. With historic strategic partnerships fashioned with the United States and Canada, and major investment deals in place with Japan, these relationships can be relied on to only deepen under his leadership.
Economically, Modi’s vision and reform agenda is driven by what can be described as ”perpetual action” and transformation. It is based on proven success. It was his energetic reform agenda as Chief Minister of Gujarat that propelled him to national leadership. As Prime Minister, we are seeing him replicate this formula: a handful of marquee reforms supplemented with a flurry of lower profile, more technocratic reforms.
Modi’s most iconic reform to date has been the decision to “demonetize” the economy; withdrawing modest denominations of currency, replaceable with new bills only through bank accounts. Designed as a program to wean India off a cash-based economy, Modi is building the foundations of an effective tax system, choking out corruption, and fostering long-term economic development. Bold and controversial as the step towards demonetization has been, the Indian people endorsed Modi’s plan with a historic and sweeping victory in state elections, particularly in the state of Uttar Pradesh. Having paid a significant short-run cost to achieve this goal, particularly in the form of criticisms levied by the opposition and media, the initiative and Modi’s economic stewardship has won broad domestic support. The global business community should pay close attention to the serious transformations occurring in India, as the country becomes a more stable and attractive market to invest and operate in.
Lesser known, but equally important reforms include a national Goods and Services Tax, changes to the bankruptcy code, and the beginning of an overhaul to the public service. Combined with major initiatives in training, infrastructure, trade and the formalization of the Indian economy, there are encouraging signs to believe that the traditional impediments for doing business are being replaced with enabling accelerants for growth.
Although we can expect this list to grow, India’s historical institutions will attempt to impede the rate of transformation. State-run banks hold large quantities of non-performing assets and can be counted on to erect local barriers. Similarly, as land reform is largely managed at the state-level, reforms in agriculture and industrial rezoning will be slow. This inertia will be fiercely challenged by an administration emboldened to accelerate economic reform and industrial development.
As exciting as the next chapter is, India’s best prospects are long-term. During my visit in January, I continued to be struck by the endemic poverty, deep social cleavages and complex politics – particularly the scale with which these factors have inhibited the world’s largest democracy from emerging as an economic powerhouse. Not since Indira Ghandi has the country had the quality and strength of leadership that my friend Narendra Modi displays. His recent success at the polls should not be underestimated; it is a powerful mandate by the Indian people. The time to invest in India has arrived, best reserved to those with thorough knowledge and great patience.
Working together in a unique global affiliation, Dentons and Harper & Associates are well positioned to provide clients interested in doing business in India with assessment services, entry strategies and identifying opportunities across a range of sectors to participate in this emerging powerhouse. Harper & Associates work out of Dentons’ Calgary office and is engaged as a consultant with the Firm’s worldwide team and clients. Building on his international experience and network as a G-7 leader, Mr. Harper provides advice to clients on market access, managing global geopolitical and economic risk, and how to maximize value in global markets.
Please contact Partner lead of our Government Affairs and Public Policy group in Canada, Joe Lougheed and Dentons Canada Region CEO Chris Pinnington for further inquiries.
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