U.S. tech CEOs give India PM Modi boost ahead of election

The
ironclad
relationship
that
India
Prime
Minister

Narendra
Modi
has
developed
with
CEOs
of
the
largest
U.S.
tech
companies
is
giving
his
nation
the
foreign
support
that
India
has
craved
for
more
than
a
decade.

Those
ties
also
have
boosted
Modi’s
own
profile
ahead
of

key
elections
that
start
Friday,
a
former
Indian
government
official
told
CNBC
on
the
condition
of
anonymity.

The
promise
of
further
economic
growth
in
India
as
China’s
economy
slows
has
led
many
American
CEOs
to
support
Modi’s
policies.

Tensions
between
Washington
and
Beijing
have
also
pushed
U.S.
conglomerates
to

diversify
their
manufacturing
bases
to
countries
including
India
to
avoid
disruptions
from
any
potential
conflict.

“Shifting
supply
chains
away
from
rivals
makes
India
a
very
important
linchpin,”
Manjari
Chatterjee
Miller,
senior
fellow
for
India,
Pakistan,
and
South
Asia
at
the
Council
on
Foreign
Relations,
told
CNBC.

The
support
from
major
U.S.
companies
also
helps
to
shield
Modi
from
criticism
of
India’s
continued
purchase
of
Russian
and
Iranian
oil,
as
most
major
economies
sanction
the
two
nations.

Ahead
of
the
election,

Apple’s
expansion
into
India
in
particular
has
given
Modi
political
clout
and
created
more
investing
interest
among
U.S.
companies,
experts
told
CNBC.

“The
story
of
Apple,
such
a
marquee
name,
has
worked
in
Modi’s
favor
–
not
only
has
it
helped
the
economy,
but
it
has
also
given
him
political
swagger,”
said
Pravin
Krishna,
Chung
Ju
Yung
distinguished
professor
of
international
economics
and
business
at
Johns
Hopkins
University.

Modi
has
established
an
ongoing
dialogue
with
a
range
of
powerful
Silicon
Valley
CEOs
as
India’s
national
election
starts.

The
election,
which
will
end
in
early
June,
is
expected
to
see
more
than
960
million
citizens
vote.
Polls
suggest
Modi’s
Bharatiya
Janata
Party
is
expected
to
win.

Tesla
CEO

Elon
Musk
plans
to
head
to
New
Delhi
next
week.
Ahead
of
Musk’s
visit,
Modi’s
government
lowered
import
taxes
on
electric
vehicles
for
manufacturers
who
invest
$500
million
in
setting
up
production
centers
in
India.
The
move
has
clearly
drawn
interest
from
Tesla.

The
last
meeting
between
the
two
leaders
came
in
June
in
New
York,
where
Musk
brought
up
India’s
high
import
tax,
according
to
sources.
Following
Musk’s
one-on-one
meeting
with
Modi,
he
said
Tesla
was
hoping
to
build
a
factory
in
India
soon.

However,
Tesla’s
desire
to
expand
in
India
goes
beyond
building
and
selling
electric
vehicles.
Tesla
is
also
interested
in
learning
more
about
India’s
lithium
reserves,
which
were
discovered
in
2023,
two
sources
told
CNBC.
A
scarcity
of
lithium
—
a
key
EV
component
—
as
electric
cars
gain
popularity
has
created
an
arms
race
among
global
manufacturers.

Modi’s
rapport
with
corporate
America
has
grown
exponentially
in
the
last
18
months
as
U.S.
tensions
with
China
push
the
West
to
look
to
India
for
opportunity.

Nvidia
CEO
Jensen
Huang
flew
to
India
in
September
to
meet
the
prime
minister
and
discuss
ways
to
work
on
artificial
intelligence
projects.
During
his
trip,
Huang
revealed
plans
to
partner
with
India’s
Tata
Partners
and
Reliance
to
build
out
the
country’s
AI
infrastructure.

When
Modi
made
a
state
visit
to
the
White
House
in
June,


Alphabet
CEO
Sundar
Pichai,


Apple
CEO
Tim
Cook,


AMD
CEO
Lisa
Su,
among
others,
attended
a
roundtable
to
discuss
opportunities
to
work
with
India
on
artificial
intelligence.

In
order
to
ensure
U.S.
companies
keep
investing
in
India,
Modi
has
some
huge
hurdles
to
overcome.

“Land
and
labor
laws
are
at
the
top
of
the
list,”
Frank
Wisner,
former
U.S.
ambassador
to
India,
told
CNBC.

India’s
current
laws
make
it
difficult
to
hire
and
fire
workers,
as
well
as
buy
land,
which
could
pose
problems
for
U.S.
businesses
trying
to
expand.

If
Modi’s
government
is
reelected,
it
will
also
be
tasked
with
bringing
down
India’s
high
youth
unemployment
rate
of
44%
and
implement
training
programs
that
would
strengthen
the
country’s
manufacturing
base,
adds
Miller.
If
the
underlying
issues
hindering
India’s
growth
are
not
fixed,
that
could
challenge
U.S.
companies
from
continuing
to
expand
there,
experts
told
CNBC.

“India’s
reputation
as
a
place
to
do
business
can
accelerate
even
further
if
bureaucratic
red
tape,
regulatory
complexities,
and
mediocre
corporate
governance
are
gradually
eradicated
or
minimized,”
Dinyar
Devitre,
an
advisory
board
member
of
General
Atlantic
who
has
served
on
multiple
public
boards
including
Altria,
Kraft
Foods,
SAB
Miller
and
IHS
Markit,
told
CNBC.

For
now,
the
money
is
pouring
in.
Foreign
direct
investment
into
India
has
steadily
risen
from
$36
billion
in
2014
to
over
$70
billion
in
2023,
according
to
Visual
Capitalist.
During
the
same
period,
investment
in
China
has
fallen.

ETF
data
shows
investors
continuing
to
allocate
capital
into
India,
according
to
Roundhill
Investments’
Dave
Mazza.
So
far
this
year,
inflows
to
India
sit
at
$2.5
billion,
right
behind
Japan’s
$3.5
billion.
At
the
same
time,
China
has
seen
outflows
of
nearly
$1
billion.

“India
remains
one
of
the
most
attractive
growth
and
investment
stories
for
this
decade,”
says
Jitania
Kandhari,
Managing
Director
at
Morgan
Stanley
Investment
Management
to
CNBC.
Kandhari
acknowledges
that
valuations
are
high
but
adds
that “earnings
have
kept
up.”