American Investors embrace a less-democratic India

A popular opposition figure is in prison. Another major party’s election funds have been seized. As India, the world’s largest democracy, gears up for elections in less than two weeks, investors from the world’s oldest democracy are embracing it like never before.

American businesses are attracted to an economy that is slated to grow 7.5% this year, according to the World Bank—more than three times the global pace. India, which had long frustrated foreign businesses with its sometimes chaotic political system, might have the world’s third-largest economy by the end of the decade.

Prime Minister Narendra Modi is expected to sail through general elections held once every five years, potentially surpassing his previous vote tally but worrying some observers. The Sweden-based V-Dem Institute, which had downgraded India to the status of “electoral autocracy" in 2018, expects Modi’s third term to lead to further deterioration. The U.S. government funded research group Freedom House, which rates India as partly-free, said the ruling BJP party has increasingly used government institutions to target political opponents.

With the rift between the U.S. and China widening, the U.S. State Department calls the relationship with India one of the most strategic and consequential of the 21st century. It has also made a tepid call to India’s government for “a fair, transparent and timely legal process" for imprisoned opposition leader Arvind Kejriwal and cited an opposition party’s allegations that its bank accounts were frozen. The statements were met with strong objections from New Delhi.

The bonhomie is clear when one looks at investment and trade figures. Foreign direct investment from the U.S. into India has risen substantially