Modi Inc. goes global

Nearly two decades ago, a theory known as the Blue Ocean Theory gained popularity. This followed the release of a book by the same name authored by two INSEAD professors. The theory essentially spoke about tapping new markets where little or no competition exists. While building new markets requires more time and effort and is also costlier compared to tapping existing global markets, the benefit is that once they are established, they allow a company to sell more products at better margins. This is in sharp contrast to selling products in competitive markets where companies from around the globe have already established themselves. This was known as the Red Ocean Theory, where selling in a competitive market leads to cut-throat competition, resulting in thinner margins.

India is currently trying to diversify its markets to expand its export basket to newer destinations. The rationale is that there are several markets which may require Indian products but have not yet been tapped. Besides exporting to the usual suspects such as the USA, the UK and EU countries, there is a need for geographical and product diversification to build better income streams for the country. The recent issues with the US have amply demonstrated the benefits of geographical diversification of trade channels. The closure of the Hormuz Strait has also impacted our exports to the Gulf countries.

It is precisely this objective that has seen Prime Minister Narendra Modi making all-out efforts to build ties with countries across the world. Narendra Modi has visited 81 countries across 103 trips during his 12-year tenure as Prime Minister. He has visited some countries more than five times. These include Japan, the USA, France, the UAE and Germany. Currently, he is on his third trip to Australia. Some of the countries were being visited for the first time by an Indian Prime Minister. These include Israel, Mozambique and Nigeria, among others.

While politics and strengthening security formed the basis of these trips, one underlying objective throughout has been to strengthen India’s trade with those countries. Solidifying friendships and wooing NRIs have also served the purpose of attracting more foreign investment into India through FDI and FII. Since 2014, these numerous visits have also increased India’s visibility across the world and put it firmly on the global map. The full benefits of these visits, many of which involve strengthening economic ties, will be felt not over a year or two but for decades to come. Energy security has also formed the backbone of discussions with oil-rich countries. Besides meeting the heads of nations and inviting them to visit India, the PM also makes it a point to meet the Indian diaspora as frequently as possible. Whenever time permits, he also meets industry leaders and businessmen. While many countries, including the USA, the UK and Germany, have traditionally had businessmen accompanying them on state visits, India has only recently begun placing business among the top items on the agenda. Technology partnerships, defence partnerships, stronger maritime ties, Silicon Valley outreach and major infrastructure deals have been pursued during his visits. His first trip to Japan saw the bullet train partnership being inked.

During his current three-nation trip to Indonesia, Australia and New Zealand, too, a number of mutually beneficial agreements are expected to be signed. During the just-concluded visit to Indonesia, a number of MoUs and agreements were signed covering space, defence, education, critical minerals and maritime cooperation. The linkage of UPI and the establishment of an IIT Bangalore campus in Indonesia were also agreed upon. In defence, discussions covered the sale of BrahMos. India also pledged to help Indonesia upgrade the Sabang Port, which is close to India’s Nicobar Islands. This is a strategic move as it is located at the entrance to the Strait of Malacca, which connects to several countries in the Far East. It is as important as the Strait of Hormuz in the Gulf. The Strait of Malacca also carries more than one-fifth of the oil shipped to Asian countries, including China and Japan. It is also the shortest sea route between the Far East and Europe. In a way, both waterways can be viewed as choke points of global trade. While one serves as the outlet through which oil-producing countries ship their exports, the Strait of Malacca is the most convenient route for goods, including energy supplies, destined for the Far East.

While the agreements with Australia and New Zealand are yet to be announced, the point is that India, like the developed countries, is now putting business at the forefront. Modi has effectively become India’s leading sales representative, inking government-to-government deals and paving the way for Indian industry to follow.