India's Modi out to woo investors on first Europe trip

India's Modi out to woo investors on first Europe trip

NEW DELHI - Prime Minister Narendra Modi will take his push to turn thriving India into a major manufacturing and investment hub to the eurozone's two biggest economies this week on his maiden visit to the continent.

Modi flies out Thursday to France, whose government is desperate to save a troubled $12 billion defence deal, before heading to Germany to inaugurate one of the world's biggest trade fairs.

He will also visit Canada at the end of the three-nation trip, home to a large Indian diaspora.

The right-wing Hindu nationalist was effectively blacklisted by the European Union for years after deadly communal riots in 2002 in the state of Gujarat, which he governed for over a decade.

But after his landslide victory in last year's general election and with India's economy now growing faster than even China's, the one-time outcast is likely to receive a warm reception.

While New Delhi's close ties with Moscow may limit the areas of common ground on geopolitical issues, the trip represents a perfect opportunity for Modi to tout India as a place to do business.

"I look forward to visit France to seek greater French involvement in our Make in India Programme, including in the defence manufacturing sector," the prime minister wrote on Facebook ahead of his departure.

Modi launched the "Make in India" campaign last year as the centrepiece of a project to rewrite the country's reputation as a tricky place to do business in, beset by bureaucracy, corruption and a stringent tax regime.

Rules relaxed

The government has already relaxed rules for foreign investors, eager to create work for the millions who enter India's jobs market each year.

But India is currently ranked 142nd out of 189 countries in a World Bank "ease of doing business" global league table.

And the continued uncertainty over a deal for India to buy 126 Rafale fighter jets from the French company Dassault Aviation is seen as symptomatic of the challenges confronting foreign companies.

Dassault won the right in 2012 to enter exclusive negotiations to supply the jets, with experts saying a final deal could be worth $12 billion.

But after tortuous negotiations lasting for over three years, there are now new questions about its cost, although Dassault's boss Eric Trappier recently insisted the deal was "95 per cent finalised".

French President Francois Hollande confirmed to reporters on Tuesday that he and Modi "will have discussions" about the Rafale deal while stressing he didn't want the issue to define their relationship.

There are also hopes the visit will provide a shot in the arm to another delayed deal with French nuclear giant Areva, still awaiting the go-ahead to set up six reactors in India's western state of Maharashtra, five years after a bilateral civil nuclear accord.

"It is really good if it happens during this visit. If not, it will happen later," French Ambassador Francois Richier said in Delhi Tuesday.

After his three-day visit to France Modi heads to Germany, where he and Chancellor Angela Merkel will jointly inaugurate the giant Hannover Messe trade fair on Sunday.

Germany is India's largest trading partner in the European Union, with bilateral trade amounting to some 16 billion euros in 2014.

Organisers of the fair say Hannover is a perfect showcase for the pro-business Modi to demonstrate how he is improving India's business climate.

EU before Russia

While Modi was quick to meet US President Barack Obama and Asia's top leaders after his election in May, it has taken him nearly a year to travel to Europe.

However K. G. Suresh of Delhi's Vivekananda International Foundation think-tank said it was significant Modi had chosen to visit the EU's powerhouses ahead of Russia.

"Russia remains an old friend but obviously (the trip) reflects the pragmatic approach of the Modi government and its economy-centred foreign policy," Suresh told AFP.

"The ideals of the past are no longer the guiding principles. The government's vision is to emerge as a powerful economy."

Sujit Dutta, another Delhi-based analyst, said the visit reflected Modi's overriding desire to fuel the resurgence of India's economy, which is forecast to grow more than eight per cent this year.

"The principal goal for Modi is to enhance the manufacturing base back home and give impetus to growth," said Dutta, a Jamia Millia Islamia university professor.

Trade between India and the EU as a whole has grown from 28.6 billion euros in 2003 to 72.7 billion euros in 2013, and both sides are keen for the upswing to continue.

"India-Europe trade ties have been fraught with differences in the past and the two sides will look to smooth out the creases this time around," said Dutta.

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