Modi The voice of reason at DAVOS

The Prime Minister presented India’s gentler and kinder vision of a new global order — a cooperative, harmonious, sharing, and caring world — which found resonance among the delegates at the world’s biggest networking platform

Days before India was to host 10 ASEAN leaders as guests at the Republic Day celebrations in New Delhi, Narendra Modi led a big Government business delegation to the World Economic Forum in Davos, becoming the first Prime Minister to do so in 21 years. In his 53-minute speech delivered in Hindi, Modi not only showcased India as a fast-growing economic power and a potential driver of global growth, but also identified three challenges that the world is facing today and the collective need to confront them in the interest of human prosperity. The three challenges he identified were: Protectionism/inclusive globalisation, climate change, and terrorism.

Highlighting the economic progress India has made since former PM HD Deve Gowda attended the summit in 1997, Modi’s comparison of India then and now was apt as the Indian economy has leapfrogged from a GDP of $400 billion in 1997 to an estimated figure to reach $5 trillion by 2025, jumping more than six times. With the rise of protectionism, and globalisation coming under assault in certain parts of the world, India’s growth trajectory comes under threat, which is why Modi spoke of protectionism as a new challenge that the world must confront now. It was in this context that Modi spoke about the way India wants to engage with the world to do business. It was an indirect snub to US President Donald Trump who, after taking office, has been seen championing inward-looking policies with “America First” as the main slogan. Such disruptive policies by the world’s biggest economy by erecting trade barriers go against the principle of open and inclusive economy.

More than 3,000 of the world’s most influential figures gathered at Davos from over 100 countries. Being the first Indian Prime Minister to give the inaugural speech at the forum, Modi invited global businesses to “invest, travel, work, manufacture, and export products” and reaffirmed India’s commitment to uproot “licence and permit raj” and replacing red tape with “red carpet” to welcome businesses. The message went loud and clear to 70 heads of state, Governments, chief executives, and top bankers. He raised concerns that new tariff and non-tariff-based barriers are being imposed, as a result of which bilateral and multilateral negotiations have become casualties. Such an approach by certain countries has led to slowing down in cross-border financial investments and expansion of the global supply chain.

In an indirect hint to Trump’s isolationist policy, Modi cautioned that the trend towards globalisation could come under threat if such exclusive policies are pursued in an economically interconnected world of today.

The disruptive policies of Trump that discourage businesses to invest overseas can potentially affect the growth prospects of emerging economies such as India which is dependent on foreign investment. Being an opponent of globalisation, Trump — during his 2016 election campaign — articulated his views on protecting jobs as companies were seeking to reduce labour costs by relocating to Mexico and elsewhere. In contrast, what India has chosen is a predictable, stable, transparent and progressive platform in an otherwise uncertain global environment. With this in perspective, Modi stressed that India stands for three principles: Reform, perform, and transform. 

As an apparent reference to Trump’s “America First” policy, Modi cautioned that many countries are becoming inward-focussed and globalisation is shrinking. Such tendencies cannot be considered a lesser risk than terrorism or climate change, the other two challenges that he identified. 

Expressing concern over a world with global fissures that is becoming increasingly fractured, Modi invoked India’s adage of viewing the world in the prism of Vasudhaiva Kutumbakam (the world is one family), in which every one’s well-being is the common goal of mankind. Modi presented India as a land of “unprecedented opportunities for higher returns on investments” to leaders attending the world’s biggest networking platform.

The projections of India that Modi presented at the forum are as follows: Electronics market to reach $400 billion by 2025; gaming market to reach $801 million by 2022; IoT market to reach $9 billion by 2020; speciality chemical market to reach $70 billion by 2020; dairy industry to double to $140 billion by 2020; food and retail to touch $482 billion by 2020; household consumption of processed food to treble to $403 billion by 2030; auto market to touch $300 billion by 2026, with exports growing five-fold; auto component after segment to reach $32 billion by 2026; world’s largest generic drug and vaccine producer, with vaccines exported to 150 countries; more than 500 active pharmaceutical ingredients manufactured in India; pharma exports grew by 11.9 per cent for decade ending 2015-16; in the electronic sector, generation and T&D equipment to reach $100 billion.

Complementing Modi’s identification of the new challenge that the world had increasingly started looking inwards, Finance Minister Arun Jaitley reminded that India stands as an exception and is projected to be one of the three largest economies in the world over the next 25 years. He also noted that India has already demonstrated its capacity to grow even during adversity. Jaitley was addressing the valedictory session of Asean-India Business and Investment Meet and Expo in New Delhi, wherein he observed that the growth story of Asean was quite similar to the Indian story, as growth eluded both these regions when the Western world was growing at a fast pace.

By pursuing an open economy policy, India’s competitive strength has substantially increased, and it has emerged as one of the fastest growing economies of the world. India has already moved from being the seventh largest economy to the fifth, and in the coming 25 years, it aspires to be one of the three largest economies in the world. 

The second major threat identified by Modi in Davos was climate change, which the world has failed to tackle collectively. Taking a critical view, Modi said everyone wanted carbon emissions to be cut, but the rich world was not ready to help the developing economies with new technology. Modi observed that India is doing its best to generate more renewable power. With this in mind, Modi announced that India shall host the first summit of the International Solar Alliance in March 2018. In 2016, India and France jointly envisioned a new international treaty-based organisation and this revolutionary step soon changed into a successful experiment. India has an ambitious plan to produce 175 GW of renewable energy by 2022. Given that India could achieve more than one-third of the target in the past three years, the target is achievable.    

The third threat that the world confronts is terrorism. Modi observed that while terrorism is dangerous, what is equally dangerous is the “artificial distinction” made between “good terrorist” and “bad terrorist”. He expressed worry that many youngsters are becoming radicalised and that such trends ought to be stopped.    

Modi’s speech opposing protectionism was welcomed by China, which evinced interest to enhance cooperation with India to strengthen the globalisation process for the benefit of all countries. It appears that China, which has benefitted the most from the globalisation process, was happy that Modi cautioned the perils that humanity shall face if protectionism is allowed to arrest the movement towards further globalisation. In particular, Modi’s comparison of the shrinking of globalisation as no lesser a risk than terrorism or climate change must have been music to Chinese ears. The Chinese Foreign Ministry spokesperson, Hua Chunying, told the media that China would be too happy to work with India and other countries in the globalisation process. In a rare occurrence, China’s Global Times carried a photo of Modi’s address on the front page!

It may be noted that as one of the biggest beneficiaries of globalisation, China emerged as the world’s factory in the past three decades, posting double-digit GDP growth rates for years while thriving on massive exports to all parts of the world. In particular, China is unhappy that Trump, even before becoming the President of the US, had targeted China and even threatened to impose high tariff to arrest the export of Chinese products, and had therefore opposed his “America First” policy. This was, in fact, the main theme of Chinese President Xi Jinping’s Davos speech in 2017. Therefore, China found Modi’s speech as an endorsement of its own stance on world trade and thus called for cooperation with India and other countries so that the growth momentum for the world is maintained. China hopes such an approach shall help meet the aspirations of the people of both countries.

Modi’s speech at Davos made him a star attraction. The Prime Minister also used the opportunity to position India as a “humanising and harmonising force in an increasingly fractured world”. His speech spurred the delegates to know more about how digitisation and innovation is taking India forward.

With Bollywood stars in attendance, with delicious Indian cuisine at the welcome dinner, and with an Indian touch of Yoga, it all looked like an Indian show. In his own inimitable style, Modi seems to have done well in pitching India in standalone terms at Davos. In sharp contrast to Xi’s call for globalisation in 2017 that had Chinese characteristics, Modi presented India’s gentler and kinder vision of a new global order, “a cooperative, harmonious, sharing and caring world”, which found greater resonance among the delegates.

It is an amazing turnaround that a world that rejected Modi not long ago, with the US even denying him a visa, now sees him as a messiah. With the upcoming last full Budget of his Government, and elections in some States not far away when Modi took the stage at Davos, he was making a statement before a major platform that his reforms shall remain on track and it was enough for the world to repose faith in India and its inclusive economic policies. If India’s current economic growth rate continues, Modi’s aim to raise the country’s gross domestic product to $5 trillion by 2025 by increasing investments could become a reality. The abolition of around 1,400 archaic laws is a pointer to that goal. 

Addressing after Modi spoke and left, how did President Trump respond to the reaction of the world leaders to his “America First” and isolationist policy? Maintaining his inconsistency, Trump seemed to have loosened his tough line and offered “America’s friendship and partnership” to the world in his debut appearance before the global business elite in Davos, arguing that “America First does not mean America alone”. In his address to the forum, Trump said that the US is open for business and that it is competitive once again. But like his stance on North Korea — which he threatened to “totally destroy”, while at the same time, expressed willingness to talk directly with Kim Jong-un — Trump warned that the US “cannot have free and open trade if some countries exploit the system at the expense of others” and that he is for free trade but on a reciprocal basis. He cautioned that the US “will no longer turn a blind eye to unfair economic practices”.

But it transpired that Modi’s thunder had already left a lasting effect. India can no longer be ignored in any world forum where its voice would remain decisive. Modi stood tall by dwarfing others at the world’s biggest business platform and thus deserves credit. 

The writer is ICCR India Chair Visiting Professor at Faculty of Economics and Business Administration, Reitaku University, Japan. Views expressed are personal and do not reflect either that of the ICCR or the Government of India.

E-mail: rajaram.panda@gmail.com