India’s parliamentary election was just dominated by the Bharatiya Janata Party, setting the stage for a single-party majority government for the first time since 1984. The victory comes with a pro-business leader that is looking to create more stable, tax-friendly conditions for U.S. companies.
Milan Vaishnav, an expert at the Carnegie Endowment for International Peace said, “This is really historic… It’s going to create a certain sense of stability…U.S. companies are very excited.” The Indian stock market agreed, rallying on the news of the election results.
Moody’s Investor Service, a U.S. credit ratings agency, has issued a standard statement of “credit positive” in response, and currently rates India at the lowest investment grade (Baa3) but with a stable outlook. The additional stability in Indian government, paired with the new party’s less restrictive take on foreign investment and domestic business growth have led experts to speculate that this will also lead to more US investment in India.
However, not everyone shares the sentiment. Moody’s rival rating agency Standard & Poor’s also rates at the lowest investment grade but cites a ‘negative’ outlook. India’s economy is the slowest its been in a decade, with a slow grow of less than 5 percent.
Alyssa Ayres, an academic on India at the Council of Foreign Relations, says that many U.S. companies have done business in India in the last ten years, most notably IBM with over 100,000 employees. However, she acknowledges that India’s policies had begun to create stress in recent years but with the new party in power says, “This is a real opportunity for India’s growth.”