Reform is no longer the biggest obstacle to India’s economic ambitions – The Diplomat

A few weeks ago, Indian justice chief NV Ramana argued in London that India can become a prime destination for global investment thanks to its independent judiciary and rule of law. Just a few days later, that theory was put to the test in the restless state of Uttar Pradesh: there, in the capital Lucknow, a vast new shopping mall built by a well-known Indian Muslim businessman, Yusuff Ali, was subjected to a wave of Hindu nationalist attacks.

Ali’s Lulu group, which has built a significant footprint in the Middle East over the past decades, has brought a massive investment of over $ 250 million and a whopping 15,000 jobs with its new Lucknow mall. Yet, shortly after the opening of the mall, Prime Minister Yogi Adityanath, Hindu nationalist groups claimed that 70 percent of the staff are Muslims.

When that charge was dismissed by the mall management, a video surfaced showing a handful of people offering Muslim prayers in a corner of the mall. Soon, Hindu nationalists retaliated by reciting Hindu chants in response.

It wasn’t just Hindu nationalists who wanted a slice of the controversy. Last week, Muslim leader Azam Khan of the opposition Samajwadi party said Yusuff Ali is a fundraiser for Hindu nationalist Rashtriya Swayamsevak Sangh (RSS), widely regarded as the ideological source of the ruling Bharatiya Janata Party (BJP). Khan further said that Ali “wants to create collective violence in the state”.

The series of disputes, all occurring in less than a month after the mall opened, highlighted the significant long-term challenge facing India’s efforts to become a global investment destination.

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In the past fiscal year, India has benefited from a record inflow of foreign direct investment (FDI), amounting to nearly $ 80 billion. Prime Minister Narendra Modi’s government attributed this to his “liberal and open” FDI policy. However, in more recent times, a rapid weakening of the rupee, war-fueled inflation in Ukraine and rising interest rates in the West could discourage further inflows. So far this year, foreign investors have withdrawn nearly $ 30 billion from Indian stocks, also a record.

Common tensions don’t end for global investors and businesses either. Earlier this year, reports claimed that Bengaluru-based global tech companies – long famous as India’s Silicon Valley – were looking to relocate to the neighboring state of Tamil Nadu after bearing the brunt of growing community conflict. . The state of Karnataka – of which Bengaluru is the capital – is governed by the BJP and has seen a wave of clashes and controversies in recent months.

Earlier this year, the Karnataka government introduced a so-called anti-conversion law to prevent forced religious conversions. Ahead of his passage, dozens of Christians and churches have been attacked by Hindu nationalist vandals. Meanwhile, in some government colleges, Muslim women have been prevented from attending classes while wearing the veil. This move was followed by more clashes between Hindu and Muslim students. Muslim meat sellers were also targeted after a BJP leader called for a ban on halal meat.

Karnataka’s worsening social atmosphere has even forced leading industrialists to speak up. In a tweet, Kiran Mazumdar Shaw, founder of the biotech company Biocon, appealed to Prime Minister Basavaraj Bommai “not [to] allow such community exclusion “.

Modi has long expressed an ambition to turn India into a global investment hotspot, and none of this is helpful to that cause. The rapid marginalization and exclusion of India’s 200 million Muslims will minimize the country’s economic potential, and frequent clashes between communities will deter global businesses from engaging in long-term investments.

In 2021, more than 160,000 Indians renounced citizenship worldwide, the highest number recorded in the past five years. That figure, in fact, had grown steadily over the previous five years, having only been hindered in 2020 by the pandemic. This year, around 8,000 millionaires are expected to leave India, placing it third on the list of countries losing wealthy people, after Russia and China, according to global migration consultancy Henley and Partners.

Politically, there are few encouraging signs that all of this will change. This year, the last remaining Muslim legislator in the BJP resigned, thus leaving the BJP without a single Muslim among its 395 members in parliament.

But if India is to successfully become a global investment destination, Modi will have to signal to the world that it is building a more harmonious and inclusive democracy.