Modi Government Offers Renewed Sense of Optimism: US Corporate Sector

The Narendra Modi-led government in its first week has offered a renewed sense of optimism, even as no major policy decisions have been announced, according to the US corporate sector.

"There is a renewed sense of optimism in the air and we share that sentiment," said the US India Business Council's (USIBC) acting president, Diane Farrell.

"USIBC member companies are in this partnership for the long-haul and we look forward to engaging with Prime Minister Modi and the newly appointed Cabinet, to deepen investment and increase bilateral trade to $500 billion by 2020," Mr Farrell said.

"The goal must be to create a magnetic pull for investors to return to India, by attracting international attention, taking dramatic steps to improve the business climate," he said.

A similar optimism was seen in former USIBC president Ron Somers, who recently left USIBC to form a policy advocacy group aimed at improving India-US relationship.

"The new Indian government is dynamic, robust - and the excitement generated by the election must now be capitalized on," said Ron Somers.

Describing the invitation of the SAARC leaders to the swearing-in ceremony as a foreign policy masterstroke, Mr Somers said, "Bold reforms like opening insurance and defense will spur investor enthusiasm, attracting investment and technology."

According to the Conference Board, a non-profit business membership and research group organisation, the big question is whether India can change enough to be a powerhouse.

"That question depends on reforms to unleash the power of India's service sector while revving up its nascent industrial sector. India's manufacturing is largely a cottage industry. Small enterprises make up 84 per cent of its manufacturing base, compared to China's 25 per cent, for example," it said.

The board said that Modi Government's policies will impact the willingness of companies and investors to pour capital into new projects.

"India has great potential but many hurdles to turning potential growth into actual growth," it said.