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Abu Dhabi, UAEMonday 18 June 2018

Davos 2018: Modi's speech leaves global leadership vacuum unfilled

The Indian Prime Minister spoke about terrorism, climate change and protectionism, but stopped short of promising to lead

India's Prime Minister Narendra Modi gestures at the Opening Plenary during the World Economic Forum (WEF) annual meeting in Davos, Switzerland. Denis Balibouse / Reuters
India's Prime Minister Narendra Modi gestures at the Opening Plenary during the World Economic Forum (WEF) annual meeting in Davos, Switzerland. Denis Balibouse / Reuters

Seven years ago this month, 10,000 executives from more than 100 countries piled into the small city of Gandhinagar in eastern Gujarat, for a marathon investment conference. By the close of “Vibrant Gujarat”, the businessmen had promised to sink more than $450 billion into the state, slashing records for the largest investment total at a single event in an emerging economy. Naturally, the media heaped praise on the event’s main organiser, Gujarat chief minister Narendra Modi.

Now Indian prime minister, Mr Modi this week delivered a keynote address at the plenary session of the World Economic Forum, becoming the country’s first leader to attend Davos since 1998. In last year’s opening speech, Chinese President Xi Jinping’s enthusiastic defence of globalisation fuelled speculation that he was manoeuvring to fill the global leadership vacuum that Donald Trump had created. Significantly less authoritarian than China, and more united than Europe, India – the world’s largest democracy and seventh largest economy – is well placed to fill it. Having recently snubbed China’s One Belt, One Road project, New Delhi has already begun countering Beijing’s Asian ambitions.

But Mr Modi’s speech this week, which focused less on global leadership and more on attracting investors to India, will have disappointed many.

There were positives. He spoke passionately about climate change. Unable to resist a veiled barb at Pakistan, he talked about the threat of terrorism “irrespective of its territory of origin or target of operation”. He extolled the virtues of free trade, taking on “the forces of protectionism [that] are raising their heads against globalisation”.

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Yet by the end, Mr Modi’s speech was transactional. Pointing to the economic improvements his country has made – including formalising the informal economy and establishing centres of innovation and research – he invited investors to partake in his country’s development.

Admittedly, this is an approach favoured by many Indians, particularly in commercial circles. But at a time when global leadership is sorely needed, the prime minister offered little. And although he committed India to the battle against global ills, including the protectionism embodied by Mr Trump, he stopped short of promising to lead and take others along.

Under fire at home and abroad, Mr Trump – who will conclude the forum with a keynote address – has no plans to meet with the Indian leader at Davos. Meanwhile, Mr Modi’s speech could set New Delhi on a collision course with Washington over trade. Despite his swipes at Mr Trump’s isolationism, US trade officials have expressed concern about some of India’s trade practices.

Products entering India from the US face far higher tariffs than those going in the opposite direction. Last month, Mr Modi’s government hiked import taxes on electronics – like Apple smartphones – to boost domestic industries. Famously, India applies a 100 per cent tariff on Harley-Davidson motorcycles. Mr Trump is unlikely to tolerate this.

A quiet trade war is taking shape between India and the United States, potentially pushing the two powers further apart. Against the spectre of the US President’s closing speech, Mr Modi had an opportunity to echo Mr Xi’s words, and offer some global leadership.

“There are enough reasons for India to be known globally,” he said, at the zenith of his speech. “The most important reason is that it is an attractive business destination.” Suffice to say, the global leadership vacuum remains unfilled.