Narendra Modi’s US visit always gets a lot of coverage (and drama), and the most recent visit was no short on intensity. But other than the tough press conference questions, and pictures of Modi’s corporate entourage, there were several deals signed, and multiple promises made.
A majority of the action was in the sectors of Defence and Tech, which have been focus areas for India:
Defence
- Co-production of jet engines for the Tejas Mk-2 to be done by HAL (Hindustan Aeronautics Limited) and GE (General Electric), which will make the aircraft 75% indigenous.
- A deal signed by the US Navy with L&T (Larsen & Toubro) for ship repairs; and on-going discussions to sign similar deals with Mazagon Dock Shipbuilders and Goa Shipyard. Together these deals could cover the maintenance of two-thirds of US vessels in the Indo-Pacific fleet.
Technology
- Google said it would invest US$ 10 billion in India’s digitisation fund, and that it would open Google’s global fintech operation centre in GIFT city.
- Amazon said it would more than double its investment in India to US$ 26 billion by 2030, with a focus on growing its cloud business.
- Chipmakers Applied Materials and Micron said they would be spending a combined US$ 1.2 billion.
- Tesla said it plans to make investments in India ‘as soon as humanly possible.
Trade between the US and India has grown by 8x in the last two decades, and the US is now India’s number one trading partner. There has been heightened interest to invest in India, shown by both the US government and the American corporate sector. Two key economical reasons:
- India emerged as the fifth largest economy in the world, is the most populous country, and is also the fastest-growing large economy. Many compare India right now to what China was back in 2007, calling it India’s decade in terms of growth and opportunity supremacy
- With tensions between the US and China escalating, India is emerging as a strong contender to take away production market share, which China has been ruling over so far. Take Apple for example - it aims to make a quarter of its iPhones in India by 2025
The "India’s decade" narrative definitely seems to be showing evidence both in terms of growth and in terms of valuations. The markets made a new all-time high last week, and despite a steep premium in valuations compared to developed and emerging markets, there seems to be no stopping on the upside.
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