Ritu Jha-
The National Democratic Alliance (NDA) coalition government under the leadership of Modi 3.0 might be better than the two earlier terms says US-based venture capitalists, policy advisors, and academia. Talking to indica they also hope that the Modi government will come up with more favorable policies to boost funding, and hope he repeals the Angel Tax.
A top Indian-American venture capitalist and general partner at Monta Vista Capital, Venktesh Shukla said, “Modi is good for economic growth and stability of policies. I am excited about his third term in office. He should focus on Startup 2.0 and create an easier compliance regime for startups. The only way to do this is for all the agencies (SEBI, RBI, Income Tax, Company Affairs etc) to develop a common understanding of what needs to be done and work on removing the remaining cobwebs.”
“Today, each agency optimizes for its objectives such as tax making sure to maximize tax levy. But collectively, these measures get in the way of the startup with no benefit to the nation. The agencies collectively need to take a holistic view of what is needed to accelerate startup activity in India, what regulations are a must and what are annoyances without adding much to the nation. They should get rid of those annoyances,” he added.
When asked, as Modi-led BJP could not touch the majority mark of 272 Lok Sabha seats in the recently-concluded general elections in India, that impact investments in India, Shukla said, “It will be a coalition govt. This is the ideal scenario – Modi back in the saddle and continue his winning economic policies but forced to rely on partners that will moderate the social agenda of BJP.” He agreed the two major parties that saved Modi said, “Yes, both Chandra Babu Naidu and Nitish Kumar will demand their pound of flesh but there is a broad agreement in India on economic policy.”
“BJP’s policy was no different than Congress’ but their execution was much better and relatively corruption-free,” Shukla said and added that he was not worried about the stock market crash. “In the short term, stock markets are not good indicators of the fundamentals but in the long run, they adjust and reflect more accurately. That was a shock reaction caused by the unexpected poll results.
Karl Mehta, chairman of the Quad Investors Network at America’s Frontier Fund too believes that Kumar and Naidu have been reliable partners of NDA and both have pledged alliance pre-election and again after election.
He too has faith in the Modi coalition and said, “I believe that NDA and Modi will run the full 5 years of their 3rd term. India is the fastest-growing economy in the world, and the total number of vote share of the BJP has not come down since 2019 but only the number of seats has come down. People’s verdict is to have Modi continue the development agenda for the 3rd term, and China is certainly happy to see the BJP not getting a full majority to execute reforms and provide competition to it.”
However, the NDA coalition should not give back to China the geopolitical advantage that India has. India is the host of Quad this year and PM Modi is committed to it. I think President Biden, PM of Australia Anthony Albanese, and Japan PM Fumio Kishida will be going to India for the Quad meeting before the US election in November.”
Amit Kapoor, PhD, honorary Chairman at the Institute for Competitiveness, at Stanford University, when asked about Modi’s third term told indica, “BJP is the single largest party and the person who heads the party has to be invited to swear as the prime minister and by June 16, we have to have a new PM. The question is whether the coalition government will survive or not. There are two very important partners – Nitish Kumar and Chandrababu Naidu, both of them are very smart politicians. They are going to ask for a pound of flesh. The concern is what Nitish Kumar would do. If he decides to jump ship, then the government is gone. The important thing is that this government can be very stable.”
Asked what kind of Modi we would see now, will it be his old style of working Kapoor said, “We will see more mellowing down because he has to work with a different set of partners and will be on a weaker footing. Now he will have to work with the opposition and his partners.”
When asked whether investments in Silicon Valley will be impacted if the coalition NDA government collapses, Kapoor said: “Nothing will change. India is a very important country right now. Modi government has done some work. However, India has performed better in coalition government. In India’s history, the most consequential government was when PV Narsimha was the PM. And we have seen that India had performed well.”
Dinsha Mistree, Research Fellow, Hoover Institution, on US-India relations in Modi’s third term, told indica, “We will have to see how this election affects India’s foreign policy, and if it does at all. Foreign policy is rarely a focal point in Indian elections, and this cycle was no different. It is too early to say whether the key foreign policy positions will change or if they will remain the same. With the US election cycle ramping up, we are also unlikely to see any major new initiatives or substantive announcements between the two countries until 2025. While the US-India government-to-government relationship is in a holding pattern, there are plenty of other areas where cooperation is going forward.”
Meanwhile, VCs in India are also worried that the fewer-than-expected seats may impact the economic reforms. “A full majority for Modi 3.0 was crucial for maintaining start-up-friendly policies. His leadership is essential for initiatives like the National Deep Tech Policy to mature and for fintech founders to operate in a clearer regulatory environment, fostering innovation and growth,” Ankit Kedia, Founder and Lead Investor at Capital-A said.
“Overall, the results are a hit to the burgeoning expectations, likely in the short run, as things pan out,” asserts Jyoti Prakash, Managing Director at Resurgent India, one of the leading investment banks and SEBI-registered Category I merchant bank. Prakash believes that the NDA alliance government is likely to focus on basic welfare schemes and moderate policies rather than bold economic reforms. He fears this could make the start-up ecosystem less encouraging, with a greater emphasis on rural and semi-urban populations.
