Around the world, experts, academics and researchers arrive at the same conclusion: Prime Minister Narendra Modi’s India has become an unsafe place to invest.
A recent report by the London-based Institute for Economic Affairs (IEA), explores the challenges of doing business in Modi’s India, including the negative direction on property rights and investor protections writing, “the government is systematically breaking Bilateral Investment Treaties (BITs), ignoring court and arbitration rulings, cancelling contracts, expropriating private property and using state institutions such as the tax authorities and the courts to prosecute the very parties whose rights they should be protecting.”
Under Modi, the Indian government has cancelled over 50 Bilateral Investment Treaties (BIT), and the country’s ranking on Rule of Law was recently downgraded by Freedom House, with its judiciary ranked as equivalent to Madagascar and Togo.
The Devas case is an example of the Indian government’s assault on the rule of law and lack of respect for international agreements according to the IEA’s senior fellow on trade affairs writing, “The Devas case is particularly egregious because, having lost in the arbitration courts, the Indian authorities are now using the instruments of government – including the legal system – as a weapon to punish Devas and its investors.”
Just last week, a former UK Conservative Member of the European Parliament and Director-General of the British Chambers of Commerce, John Longworth, wrote in the Daily Telegraph about the risks for the UK in pursuing a trade deal under Modi given “India’s brute force behaviour” towards Western investors and ongoing “unjustified expropriation” of private property such as Devas’s.
The World Bank ranked India 163 out of 190 economies in terms of contract enforcement mechanisms in its 2020 Ease of Doing Business report. In the 2021 Index of Economic Freedom report, the Heritage Foundation ranked Labor Freedom, Investment Freedom, and Financial Freedom in India as “repressed” assigning a score of 41.3, 40, and 40 (0-100) for each category respectively. Moody’s and Fitch lowered their issuer default rating from ‘stable’ to ‘negative’ for India in June of 2020, citing the government’s inability to adopt policies to mitigate the risks of a long period of low growth.
This anti-investor approach has a real-world impact: before the COVID-19 pandemic, the Indian economy had sunk to its lowest ebb in over 40 years. This is the result of Indian government policies that are anti-investor, anti-rule of law, and pro-corruption.