Why more American CEOs are betting big on India

John Chambers   New Delhi     Last Updated: October 3, 2017  | 14:55 IST
Why more American CEOs are betting big on India

Following Prime Minister Modi's visit to the United States earlier this summer, the opportunity for the U.S.-India relationship to flourish has never been greater. I was fortunate to meet with Prime Minister Modi on this trip, along with other business leaders, and again in India just a few weeks ago around the launch of the US-India Strategic Partnership Forum. We have reached an inflection point in U.S.-India relations, where both countries can reach even greater heights by working together to accelerate economic growth, job creation, innovation and entrepreneurship, and, most importantly, improve the lives of citizens.

Reflecting on my recent meetings with Prime Minister Modi and the incredible progress that has been made over the past few years, particularly the past 12 months, I could not help to think about how differently things could have played out without such strong government leadership. The Prime Minister has the ability to create a vision, communicate it well while building hope for its future, and eventually execute that vision - once he determines something is good for India, he is truly fearless. While India has long been an important global market, never before has it attracted so much enthusiasm from the American business community. But today, as the fastest growing economy in the world with 1.3 billion consumers, India's potential is impossible to ignore.

India's economic transformation, from slow follower to fast innovator in a matter of several years, can be attributed in large part to Prime Minister Modi's ambitious economic reforms to increase the ease of doing business in India, as well as the unprecedented investments in accelerating India's digital infrastructure. While it's hard to imagine India moving any faster, I believe it's just getting started. By staying the course on these recent fundamental changes to the economy, India will be the second largest economy by 2050.  

Rebooting the Indian Economy
Change is never easy, especially when that change involves removing 86 percent of a country's printed currency from circulation.  Yet, demonetizing India's monetary system is a critical step towards dismantling the cash-centric black market and getting more of the population on a formal, taxable economic grid. More importantly, it moves India's economy into the 21st century.

The benefits of this decision are already apparent. Prior to demonetization, India used cash for upwards of 95 percent of all payments, and 90 percent of the country's vendors did not have the means to accept anything but cash.  Now the citizens of are opening up properly documented bank accounts and embracing card-based and mobile payments in record numbers. The digital transactions industry alone witnessed 55 percent year-over-year growth by volume, compared to 28 percent over the previous five years.  As a result, the banking system will improve as India heads towards a cashless society, which will ultimately increase credit access and financial inclusion beyond reducing the "black economy." I commend Prime Minister Modi for having the courage to act swiftly and decisively on an issue that will have a profound impact on India's economic longevity.

Creating a "Good and Simple Tax"
This July, the Indian government formally adopted the Goods and Service Tax (GST) to streamline the country's complicated system of local and national tax levies into one payment. Also referred to as the "Good and Simple Tax" by Prime Minister Modi, the GST will be a game-changer for the Indian economy.

By simplifying the existing tax system, which used to differ by each state, India is poised to better attract foreign investors often deterred by the red tape associated with transporting goods between territories. According to recent remarks by Prime Minister Modi, the abolition of inter-state check posts after the implementation of GST has already reduced time for movement of goods by 30 percent and saved thousands of crores of rupees.  And this is just the beginning. Some economic experts even project that the implementation of the GST will increase the Indian GDP by 1 to 2 percent.   

Leapfrogging India into the Digital Age
Digital innovation is the single most effective way for countries to maintain competitiveness and create jobs. No leader understands this more than Prime Minister Modi, who has made accelerating India's digital economy a cornerstone of his leadership vision and strategy. Launched in 2015, his Digital India program has committed unprecedented investments to building the country's digital infrastructure. Of all the changes ushered in by Modi, I believe this will play the greatest role in providing jobs to India's rapidly growing workforce, which grows by over 1 million new people each month.  And this will not only impact India-collaboration on the digital front has the potential to uplift bilateral trade to new heights.

I believe that the future is brighter than ever in India. Thanks to the government's willingness to embrace tough but essential economic reforms, India will serve as a model for the rest of the world not as an emerging country, but as a developed country that has the power to reinvent itself again and again.

John Chambers, Executive Chairman, Cisco, Chairman, US-India Strategic Partnership Forum

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