PM Modi Promises US CEOs a Return to Market Reforms

Prime Minister Narendra Modi told nearly a dozen US company chiefs on Monday that he is committed to liberalising his country's economy, which has underperformed other emerging markets recently after years of breakneck growth.

PM Modi spoke at a breakfast with 11 chief executive officers during his first US visit since coming came to power in May, vowing to get India's economy back on track.

Among those attending the breakfast at the New York Palace Hotel were the CEOs of Caterpillar Inc and Boeing Co.

"He wasn't at all like the politicians we're used to here," said Caterpillar chairman and CEO Doug Oberhelman, who shared his impressions of the breakfast meeting with Reuters.

"He acknowledged that the last five years have been very difficult for the Indian population, the Indian economy and the world in general, and he vowed and promised to change that. I believed him. He was very serious. ... I was genuinely quite impressed."

However, some US business groups have questioned Mr Modi's reformist credentials.

Last week, the US Chamber of Commerce and 15 other business associations representing various sectors gave a more cautious assessment of the prime minister's record so far.

Mr Modi also alarmed some foes of government tinkering with business last week when he said in India that multinational soft-drink giants PepsiCo Inc and Coca-Cola Co should help increase sales by Indian farmers by adding fresh fruit juices to their fizzy drinks.

In a letter to Obama, the US business groups urged the president to press Modi to remove barriers to trade when the two leaders meet on Monday and Tuesday

The letter highlighted India's blockage of a key World Trade Organization agreement reached last year, which overshadowed a July 30-Aug. 1 visit to India by US Secretary of State John Kerry. The business alliance also complained about India's raised tariffs and "burdensome" new testing requirements on imported information and communication technology products.

Last week, US congressional leaders on trade and finance wrote to the US International Trade Commission calling for a second investigation into India's "unfair" trade practices, detailing any changes under Mr Modi

In a speech at the Council on Foreign Relations think tank on Monday before heading to Washington, Mr Modi reiterated India's WTO stance, saying that while India supported the trade pact, its demands for food stockpiles were not incompatible with it.

He stressed his campaign to encourage manufacturing in India and the country's desire for US research and technology, something US firms have been reluctant to share without stronger Indian intellectual property protections

India, which once seemed to vie with China for the title of fastest-growing developing economy, has stumbled in recent years as a spate of scandals undermined business confidence in the government's commitment to economic reform.

Still, Mr Modi had won the confidence of at least one other high-profile US CEO even before the US visit.

Cisco Systems Inc chief executive John Chambers last week praised him as a leader who had "captured the imagination" of Indian business, adding that he would make the needed "tough decisions" to revive the company's economy.

One of Mr Modi's priorities on this trip is to gather more such endorsements and - judging from Oberhelman's reaction - he won some more converts at Monday's CEO breakfast.

"I deeply believe that he's committed to changing India," Oberhelman said.

"There's no question that part of his mission is to enhance and increase the investment climate in India, both for domestic companies and for direct investment."

Caterpillar is the world's largest maker of earthmoving construction and mining equipment. The Peoria, Illinois-based company operates several plants and research and development centers in India and - together with its two independent dealers - employs more than 10,000 people there.

Monday's events follow three momentous days for India's new leader.

On Saturday, Mr Modi addressed the United Nations General Assembly. That evening, he appeared before some 60,000 people at a musical event in New York's Central Park aimed at ending global poverty and bringing essentials such as sanitation to all.

And on Sunday, the prime minister received a rapturous welcome from Indian-Americans in an appearance in New York's Madison Square Garden arena.

Copyright: Thomson Reuters 2014