India Prime Minister Narendra Modi is drawing more and more critics as reform bills get stuck in Parliament and senior ministers in his cabinet team are mired in controversies.
Commodities trading guru Jim Rogers of Rogers Holdings is the latest among them. Rogers has lost faith in the Modi-led National Democratic Alliance (NDA) government which, according to him, talks a lot but hardly acts. After patiently waiting for a year-and-a-half, he finally sold off all his India shares. But he says he will return if Modi creates an ideal climate for investment.
So what made him exit India?
In an interview, he tells Mint newspaper that the NDA government failed to live up to investors’ expectations. The Indian market lacks a powerful locomotive to pull its wagons. The stock markets may remain bearish for another year or two unless the government introduces major reforms. Rigid laws and regulations and bureaucracy are the other factors that discourage foreign investors.
Among these, several bills for reforms are stuck in parliament as a vociferous Opposition refuse to discuss anything in the House unless some ‘tainted’ senior ministers in the Modi team are removed.
What are the expectations of foreign investors in India?
The rupee should be convertible, markets should be open to outsiders, and rules on foreign investments should be made simple and flexible. But with a corrupt bureaucracy and labyrinthine rules, chances of huge foreign investments coming to India appear to be dim. It is surprising why Jim Rogers singled out India, when stock markets across the world are in turmoil.
After exiting India, Rogers bought Chinese shares during the two-three days when its market collapsed. So foreign investors like Rogers are interested in markets that go down a lot and that relax rules to their advantage.
Asia Unhedged believes that many startups in Asia can change the face of the nations they operate in if foreign investors turn to them. But that seems unlikely.
Take the case of Rogers. He does not want to invest in startups. He thinks they have a bubbled reputation. For him, it is rewind and play back of the dot-com bubble in US in 1999.
Amid mounting criticisms, Modi has reason to cheer. His ‘Make in India’ campaign has struck a chord with business leaders.
Toyota Motor Corporation Chairman Takeshi Uchiyamada and Swedish telecom gear maker Ericsson CEO Hans Vestberg called on him Wednesday. Vestberg plans to invest $15-20 million to set up its second manufacturing facility in Pune.
Jeffrey Immelt, the CEO of global conglomerate General Electric, is planning a visit to India to meet Modi. Immelt is expected to announce a plan to manufacture in India.