India, insights after 3 years of Modi as PM
India is right now among the trendiest countries in the world thanks for its attractiveness. Indeed, India cumulates the higher GDP growth in the world, the best workforce for offshoring, high talented workforce from IIMs and IITs and huge lever in terms of Bottom of the Pyramid for the poor. And by 2020, there will be more Indians than Chinese…
India proceeded to a major change on 26May 2014 by choosing Modi as PM of India. It was the first time since the Independence in 1947 that the Congress lost the lead of the country in the benefit of the BJP.
The circumstances that led Modi to the power were the following ones:
- If it is admitted that the Nehru-Gandhi dynasty enabled Indians to feel part as the same country from a political point of view
- The Congress is perceived not to have managed to transform India from an economic perspective as successfully as the Chinese government did. Hence, the huge difference in terms of GDP per capita between both countries, respectively 1800 USD/capita versus 8000 USD/ capita in favor of China.
- In that sense, Modi economic reforms when he was the Chief Minister of Gujarat (located at the North of Mumbai and at the East of Pakistan) – the unique province in India growing at a similar pace than Chinese regions paved the way to a success of the BJP in the elections of 2014. Nevertheless, his attitude during the Gujarat riots in 2002 – where thousands of Muslims died – was not so clear. If, in 2012, Modi was cleaned of any responsibility by an Indian Comission, the Obama administration keft his ban to come to US until 2014… This was the unique fear about Modi´s management in a country where religion war between Hindus and Muslims happened twice in the XX C.
After three years, a first balance can be drafted in terms of the Modi Administration reforms:
- If India has managed to keep up a strong growth path in the last three years, the pace of the reforms has not been as steady as it was scheduled. Indeed, administrative duties remain harsh as the Doing Business World Bank Guide reflects it, India being 130 in the ranking. Some major improvements have been done for instance in terms of lowering by two the number of permits to build new buildings but 1 year and half is required to start this type of initiatives…
- The sectors where it makes lots of sense to invest are Education, IT, BPO, process, consuming goods at the exception of food (excepted for well-structured corporations), durable goods, renewable energies, retail and … tenders. As a matter of fact, two examples will be given:
- There are more than 350 foreign business schools and Universities hoping that the Indian Government opens its borders to foreign institution.
- There are now more Spanish companies set up in India than in China…
- Now, the real challenge will be to develop a structure of goods, services and solutions for the BOP segment. Low level of margins and mass distribution. This is the real challenge.
Suming it up, Modi should be re-elected and keep up the pace of these reforms but it may be more difficult to get some return as The Economist(2017) indicated it. Now, to take full advantage of India, the advisory of a professional firm of this country is required to figure out to go to India for India or for the World…