Not just rhetoric

Diane Farrell, acting president of the U.S.-India Business Council (USIBC), was in India around Barack Obama’s high-pitched trip. She spoke to Fortune India on the complementarities on which the India-U.S. bonhomie is based, and the need for caution amid the current hype. Edited excerpts:

What are some of the things American companies expect from the Narendra Modi government?
Everybody says the goods and services tax (GST) has the potential to be a game changer. Companies would also have loved to see concrete action on the Vodafone retrospective taxation issue. The government has been clear that it won’t invoke that policy in the future, but the investment community would have liked a more proactive step towards reversing the tax. We don’t harbour any illusion that it is going to happen.

What’s really different about India today?
There is a sense that you cannot put the genie back in the bottle—and it’s all about India’s youth. It’s not past glory but the future that attracts [the youth] to leaders. Modi is able to communicate the promise of the future. Of course, it’s not all rhetoric. He can point to very specific examples of what he achieved in Gujarat. People are talking about India being the next big thing again. Think of [economist Paul] Krugman’s recent optimistic remarks about India—you can’t buy that.

What’s with the surge in Indo-U.S. bonhomie?
We both understand the day-to-day struggles of running democracies, of keeping the union together as it were, while encouraging individual freedom. There is also huge respect for the Indian IT industry. The industry has created some amazing complementarities by uniting people from very different social structures, education systems ... very different training of the mind. Finally, electronic connectivity has helped the relationship become much more three-dimensional. There hasn’t always been 100% synchronicity in issues like sanctions against Iran or the Crimean annexation. But the relationship is strong enough to absorb those differences.

Yet there was anxiety about Modi until recently.
Companies try to be politically agnostic, but American companies are used to the rule of law. Obviously, they were closely following the investigations after the [Gujarat] massacres, but when President Obama called Modi to congratulate him after his victory, that sent a very strong [positive] signal.

And then, crazy hype...
The U.S. and India are on-demand societies, it’s a common genetic thread. I am sure the President and the Prime Minister have spoken about the risk of overpromise and underdelivery. You have to say that the new government is staying the course with its priorities, though it may not be making headlines everyday. The decision to give careful thought to trade facilitation and reconnect with the World Trade Organization shows measured thinking.

So trade is the final measure of the relationship?
The idea that keeps coming up is “the world’s oldest democracy [U.S.] and the world’s largest democracy [India]”. That needs to change to “the world’s two strongest trading partners who celebrate democracy everyday”.