Modi on a roll as he meets Donald Trump for the first time

Modi on a roll as he meets Donald Trump for the first time

Lines up economic and political successes at home

Narendra Modi is on a roll. The Indian prime minister arrived in Washington last night for his first meeting with Donald Trump, which takes place on June 26. after lining up two politically significant and headline-catching political and economic successes in India.

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The country’s long overdue-national sales tax, a major economic reform, is coming into force on July 1, and Modi has also stitched up the job of India’s next president for a veteran but little-known senior low-caste politician in his Bharatiya Janata Party.

These three events cover Modi’s primary aims of burnishing his and India’s images on the world stage and demonstrating a primary concern for economic development, while strengthening the BJP low caste appeal ahead of the next general election in 2019.

Phone time with Trump

Modi has spoken three times by phone with Trump but has not met him, so tomorrow’s encounter will set the tone for the relationship between two charismatic politicians, both of whom are strong public performers and nationalists and who also both like to spring surprises with their actions and decisions.

Given Trump’s extreme unpredictability and the sensitivity of some major issues, the Indian government has been careful not to publicize either an agenda or a wish list for the talks. Reports from Washington however show that the White House has not been so reticent in a long and positive briefing for journalists about the program, which includes Trump’s first working dinner in the White House with a visiting prime minister or president.

The two leaders have both tweeted on the visit, with Trump fulsomely saying he had “Important strategic issues to discuss with a true friend!”

This is an excellent start for Modi who will be hoping to repeat the strong personal bond that he quickly developed with Barack Obama after becoming prime minister three years ago – he addressed a joint meeting of the US Congress last June.

There will be agreement on the need to curb terrorism, and that will lead Modi to want Trump to be tougher with Pakistan, which fuels the unrest in Kashmir. But the two men will differ on globalization and action needed to stem climate change, which Trump spurns and Modi favours.

Visas and drones

It remains to be seen how opposed Trump is to India’s wish for visas to be available for the 100,000 Indian IT specialists working in the US. Curbing what are known as H-1B visas would seriously hit Indian high-tech companies as well as their staffs.

Defense sales will be a special focus – the Washington briefing mentioned that India had “supported thousands of American jobs” since 2008 by signing more than US$15 billion in defense contracts with the US.

An announcement is expected that the US has cleared the US$2-3 billion sale to India of 22 unarmed surveillance drones, manufactured by General Atomics Aeronautical Systems, for patrolling over the Indian Ocean, over Pakistani objections./ But it seems that Lockheed Martin’s ambition to shift its F-16 single-engine fighter jet technology and production line from Texas to India, in a partnership announced a few days ago with the Tata group, will not be mentioned publicly, even if it is discussed between the two leaders.

A positive indicator for future relations between the two countries was the announcement a few days ago that the new US ambassador to India will be Kenneth Juster, a former Warburg Pincus partner who is currently a senior Trump advisor and director of his National Economic Council.

The new GST

India’s new Goods & Services Tax (GST) will be launched with maximum fanfare in the parliament hall at midnight on June 30-July 1 at an event designed by Modi to echo the dawn of India’s independence 70 years ago when Jawaharlal Nehru, India’s first prime minister made his famous “Tryst of Destiny speech”

The GST will be presented as a unique unifying measure that binds India together because it replaces a complex mass of national and state level taxes that impede economic activity, most visibly by forcing trucks to stop to pay levies every time they cross state boundaries.

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Reuters photo at a state boundary tax collection point

The tax has been under discussion since 2000 and was in the then finance minister’s budget speech in 2010. Since then it has been opposed for short-term political reasons by whichever parliamentary parties have been in opposition, until the current government managed to break the log-jam and push through the legislation.

As might be expected in India, the new tax is however far from simple and will cause widespread confusion, even though industry is being given two months to adapt. Companies will have to file a mass of returns in the states where they operate and, instead of having just one tax rate or narrow band as happens in many countries, there will be six ranging from zero to 28 percent.

As The Economist reports in its current edition: “Officialdom decrees, for example, that shampoo, wallpaper and fizzy water are luxuries to be taxed at 28 percent; eyeliner, curry paste and plain water will attract an 18 percent levy. Restaurants will pay 12 percent, unless they are small (5 percent) or air-conditioned (18 percent)”.

Dalit president

India’s next president is set to be Ram Nath Kovind, a 71-year old lawyer and former member of the Rajya Sabha (upper house of parliament), who was the governor of Bihar till he became the BJP candidate for the post on June 19.

He has been an activist in the Rashtriya Swayamsevak Sangh (RSS), the BJP’s extreme right-wing umbrella organization, which fitted what Modi and Amit Shah, the BJP president, wanted.

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Ram Nath Kovind is greeted after his selection by Narendra Modi and (right) Amit Shah

The key factor behind his selection however was that he is a Dalit (formerly known as “untouchables” at the bottom of the caste system), which would almost automatically win him support from parties outside the BJP’s National Democratic Alliance (NDA).

The Congress Party, headed by Sonia Gandhi, and its allies were slow in selecting a candidate and were out-maneuvered by Modi and Shah. Eventually, on June 23, they also picked a Dalit politician, Meira Kumar, a Gandhi family loyalist and a former speaker of the Lok Sabha, knowing that she seems to have no chance of winning.

The president is chosen for a five-year term through an indirect electoral college system that comprises members of both parliament and state assemblies. Kovind looks set to win, when the contest takes place on July 17, because the BJP and its NDA allies make up 48.6 percent of the vote and have enough support from other regional parties to get over 60 percent.

India’s president has similar but more extensive powers than Britain’s Queen. The president can ask the government to reassess legislation and can make decisions about intervening in state assemblies, in addition to inviting a potential prime minister to form a government after an election. Modi and Shah will have a loyalist in this key post, as well as a Dalit which they hope will help them win elections, especially in the northern states of Uttar Pradesh and Bihar.

The choice of Kovind and Kumar means that neither the BJP nor Congress has picked an eminent person to fill the top post. Neither candidate has the experience or authority of Pranab Mukherjee, the retiring president, an independent-minded veteran Congress politician who had been minister for finance, foreign affairs and defense over several decades and has brought stature to the position.

These high profile Modi successes help to boost his image as a strong prime minister, but there are also serious problems. Economic growth is slowing, there are widespread farmers’ protests over prices for their produce, and civil unrest in Kashmir has reached alarming proportions alongside a long period of soured relations with Pakistan. Unless Modi can tackle these and other issues, his record will not look so good when the 2019 election arrives.

John Elliott is Asia Sentinel’s New Delhi correspondent. He blogs at www.ridingtheelephant.com.

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