Vinod Mubayi and Raza Mir


Modi’s recent trip to the White House and the many embraces he received from President Obama as well as the US Congress reminds us again of the nexus between empire and power. Hardly two years ago, Modi was a pariah in the eyes of the US Government that had refused to grant him a visa for nine long years on the grounds of violation of religious freedom. This denial was based on the pogrom of minority Muslims in Gujarat in 2002 when Modi was Chief Minister and directly in-charge of the police and the law and order machinery. The weakness of the Indian judicial system, which has rarely brought to justice anyone other than mere foot soldiers, in cases of communal violence, is well known. Despite mountains of evidence against Modi, amply documented in many reports, books, and proceedings, various official organs in India chose to issue “clean chits” to him on grounds that would strain the credulity of any impartial observer. However, the US State Department certainly recognized this reality when it opted to deny Modi a diplomatic A-2 visa in 2005 and continued to do so thereafter.


But the situation abruptly changed when the BJP gained a majority in the 2014 national elections and Modi became Prime Minister. Now this violator of religious freedom and the human rights of minorities was suddenly transformed into America’s BFF, lauded by none other than President Obama in Time magazine, in embarrassingly fulsome remarks that almost make one cringe, as India’s “reformer-in-chief”, a visionary, etc. The rapidity of this transition in the political and moral status of one individual illustrates the intimate link between the perks of power allied to the compulsions of empire. Many U.S. Presidents have been compelled to bestow their encomiums on various less than savory leaders such as the late Shah of Iran, the Saudi King, Israel’s Netanyahu, the Philippines’ Marcos, Pakistan’s Zia ul-Haq, and many Latin American presidents, all of them firm U.S. allies who had to be patted on the back and praised for being in the US camp. Modi’s entry into this roster thus indicates a qualitative change in the Indo-US relationship.


US wooing of India in recent years is explained in terms of the compulsions of empire, the need to “contain” China. India began to play an important role in this effort for strategic reasons over a decade ago and both the earlier Congress government and now the BJP edged closer to the US in defense matters.


But there is another dimension where Modi has gone much further than his predecessors in furthering the interests of US multinationals in particular and global capitalism, more generally. In an insightful article, published on the website [] on June 24 and forwarded to us by Javeed Mirza, Rahul Pandey, a professor at IIM, Lucknow, points out that the latest changes in foreign direct investment (FDI) norms in India have made entry and control of foreign investors in a lot of sectors easier. Defense and civil aviation have been opened to 100% FDI under the government approval route (the FDI limit was 49% in airlines before). Many other sectors have been allowed 100% (or near 100%) FDI with government approval or through the automatic approval route. The Indian pharmaceutical industry is known for reverse engineering, efficient operations and technological skills and is a major supplier of affordable medicines to many third world countries. In this scenario, what substantial benefit will 100% FDI bring?


India is abandoning its own progressive patent law to favor western pharmaceutical companies. The implications of this surrender to the insistent demands of the multinational drug industry are enormous not only for the health of Indians but also for much of the developing world who have become reliant on the much more affordable medicines available from Indian pharmaceutical companies.


In Pandey’s view, the ‘ease of doing business’ is being promoted at the cost of socio-economic factors including employment generation and agricultural livelihoods and will definitely hurt the interests of most Indians, especially the most vulnerable. He indicates that rather than promoting employment, these FDI relaxations might accelerate the ongoing trend of jobless growth and rising inequality. With 100% FDI owned commercial entities, a much greater share of returns on investments will go outside India, decided based on business preferences of foreign owners. Pandey argues that opening a large economy to foreign investments without either adequate checks or having a strong domestic economy of suppliers, markets and technological capability is akin to fattening a person by injecting drugs. It is a short cut to growth, but one that will yield an economy that is inherently weak and vulnerable. It is also likely to produce a society beset with economic fault-lines that constantly trigger social conflicts – a phenomenon that might intensify beyond the levels we have witnessed in the past.


Modi promised “acchhe din” instantly when he was elected but it is now acknowledged this was just a “jumla” – an election ploy – not to be taken seriously. Considering that much of his governance is coming unglued, he has taken to spending a significant amount of his time abroad, selling the country to foreign investors in the desperate hope that an increase in FDI will boost his regime’s prospects. This appears unlikely at this time

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