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

A few weeks ago, Chief Justice of India N.V. Ramana argued in London that India could become a favorite destination for global investment due to its independent judiciary and rule of law. Just a few days later, this theory was tested in the troubled state of Uttar Pradesh: there, in the capital Lucknow, a large new shopping center built by prominent Indian Muslim businessman Yusuff Ali was attacked. or attacks by Hindu nationalists.

Lulu Group Ali, which has established a significant presence in the Middle East over the past few decades, has made a huge investment of over $250 million and as much as 15,000 jobs with its new shopping center in Lucknow. However, shortly after the opening of the mall by Chief Minister Yogi Adityanath, Hindu nationalist groups argued that 70 percent of the staff are Muslims.

When this allegation was denied by mall management, a video emerged showing several people. offering Muslim prayers in the corner of the mall. Soon Hindu nationalists revenge reciting Hindu chants in response.

It was not only the Hindu nationalists who wanted to participate in the controversy. Last week, Muslim leader Azam Khan of the opposition Samajwadi Party argued that Yusuff Ali is fundraising for the Hindu nationalist Rashtriya Swayamsevak Sangha (RSS), who is widely regarded as the ideological source of the ruling Bharatiya Janata Party (BJP). Khan also said that Ali “wants to provoke communal violence in the state.”

The series of disputes, which took place less than a month after the mall opened, highlighted the serious long-term challenges facing India as it aspires to become a global investment destination.

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In the last fiscal year, India benefited from record high inflow foreign direct investment (FDI) – in the amount of almost 80 billion dollars. Prime Minister Narendra Modi’s government attributed this to its “liberal and open” FDI policy. However, the rapidly weakening rupee of late, inflation caused by the war in Ukraine, and rising interest rates in the West may have held back further capital inflows. So far this year, foreign investors have withdrawn almost 30 billion dollars from Indian stocks – also a record.

Intercommunal tensions do not go unnoticed by global investors and businesses. Earlier this year, reports said that global technology firms based in Bangalore, long known as India’s Silicon Valley, were eager to move to the neighboring state of Tamil Nadu, bearing the brunt of growing communal strife. The BJP-controlled state of Karnataka, whose capital is Bangalore, has seen a number of clashes and disputes in recent months.

At the beginning of this year, the government of Karnataka introduced the so-called anti-conversion law to prevent forced conversion to religion. In anticipation of its adoption, dozens of Christians and churches were attacked nationalist Hindu vandals. Meanwhile, in some public colleges, Muslim women were prohibited from attending classes in a headscarf. This move was followed more collisions between Hindu and Muslim students. Muslim meat merchants were also target after the BJP leader demanded a ban on halal meat.

The deteriorating social atmosphere in Karnataka forced even the leading industrialists to speak out. In a tweet, Kiran Mazumdar Shaw, founder of biotech firm Biocon, filed an appeal Chief Minister Basavaraj Bommai “not [to] allow such a collective exclusion.”

Modi has long stated his ambition to turn India into a global investment hotspot, and none of this is helping the cause. The rapid marginalization and isolation of India’s 200 million Muslims will significantly reduce the country’s economic potential, and frequent intercommunal conflicts will deter global companies from long-term investments.

In 2021, more than 160,000 Indians around the world have renounced their citizenship, the highest number in five years. This figure is, in fact, growing steadily in the previous five years – only in 2020, the pandemic prevented it. About 8,000 millionaires this year expected leave India, placing it third on the list of countries losing rich people, after Russia and China, according to global migration consultancy Henley and Partners.

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

But if India is to succeed as a global investment destination, Modi will need to signal to the world that he is building a more harmonious and inclusive democracy.