India’s new political party and its economic implications presented by Chris Devonshire-Ellis


  • Title: India’s new political party and its economic implications presented by Chris Devonshire-Ellis
  • Date: July 8th, 2014

Chris Devonshire-Ellis, Founder of Dezan Shira & Associate, provides insight into the political consequences of Modi's new government in India and its economic implications towards western investors


1. What political consequences would there be after Modi is elected in India, and Europe?
- According to Narendra Modi’s speech, the new government would prioritize trade and investment. The next Indian government would likely continue to pursue trade-led ties with the EU through the ongoing free trade agreement negotiation.
- EU Ambassador to India Joao Cravinho told a newspaper recently that Modi had lunch with the EU envoys in January to discuss what happened in 2002, the judicial process, accountability for the riots, development process in Gujarat and his election victory.

2. What economic implications would the election have on Indo-European trade?
- Rapid growth also allowed India's trajectory to diverge sharply from that of its South Asian neighbors. India gained influence, credibility, and a seat in the world's leading economic institutions, including the G20 and the Financial Stability Board.
- It is economics, after all, that enabled India's emergence in the first place. Prior to the reforms of 1991, India was large, populous, democratic, locked in a nuclear competition with Pakistan, and a partner of at least one of the big powers -- the Soviet Union.
- The challenge for India's next government, is to undertake the kinds of domestic economic choices that would have direct relevance for India's reintegration with East Asia.
- Manufacturing has grown in India's southern states but has shrunk as a share of India's overall economy, despite a national policy that has aimed to increase the share of manufacturing in GDP from around 16 to 25 percent in a decade.
- The rising cost of labor-intensive manufacturing in coastal China has scrambled the traditional production equation for export-oriented manufacturers across Asia. Some manufactures are choosing to leave China invest in India.