New restrictions, for example on e-commerce, have caused a stir among investors, who will monitor the elections closely to see if the next five years could see India taking a more protectionist approach.
Modi can boast of an impressive record. Foreign direct investment in India has grown from less than $ 25 billion in 2014 – before it took office – to about $ 45 billion in the last fiscal year.
Much of this growth has been stimulated by policies that made it's easier for global brands such as Ikea and Uniqlo to open stores, as well as Modi's "Make in India" campaign, aimed at developing the country's manufacturing base.
A great success The smart phone industry has contributed to the rise of the digital economy in India. China's Xiaomi has tripled the number of smart phones it has in India to the top of the market, while the world's leading Samsung has opened what it claims is "the world's largest mobile factory" near New Delhi last year. And Apple (AAPL), which has struggled to locate in India, started making iPhones in Bangalore in 2017.
Billions more investment dollars come from e-commerce. Amazon (AMZN) committed more than $ 5 billion to expand its operations in India during Modi's tenure, and Walmart (WMT) Last year, $ 16 billion was spent to take control of Amazon's rival Amazon, Flipkart.
The government has also facilitated the access of foreign investors to The Indian Stock Exchange, through projects such as GIFT City, a new financial center under construction in the state of Modar, Gujarat.
"I'm not saying that everything is because of this government, but this government has done a lot more than the others," said Prasanna Tantri, a professor of finance at the Indian School of Business. "India has become a paradise for all types of investors," he added.
Slowdown of elections
But the growth of one year on the other Investment has recently slowed to fade from almost 30% in Modi's first two years of operation to less than 5% between 2017 and 2018.
Some investors became more suspicious in the run-up to the elections.
"The slowdown in growth (…) is partly due to the uncertainty related to elections, investors are waiting to clarify the mandate of reform of the next government," said CNN Business, Priyanka Kishore, director of India program at Oxford Economics.
Policy changes may have encouraged this caution. In the run-up to the elections, the government adopted regulations to help local business owners – an essential element of the Modi base – at the expense of foreign competitors. New restrictions on e-commerce two months ago hit Amazon and Walmart, as rules on digital payments have affected Google (GOOGL), Facebook (FB) and MasterCard (MY).
There were other tremors too. The chairman of the Indian central bank, Urjit Patel, resigned abruptly at the end of last year following a public dispute with the Modi government over the bank's autonomy. Patel was the second Governor of the Reserve Bank of India to leave his post, while his predecessor, Raghuram Rajan, had left in similar circumstances.
The hasty appointment of a former finance ministry official to replace Patel has raised further questions regarding government interference in the country's first bank.
But Modi's overall record has been marked by an openness to foreign players, and this should continue if he wins a second term.
"A little protectionism is needed, and it is desired for an economy," said Anuradha Saha, professor of economics at Ashoka University. Global players such as Amazon have a habit of operating in various regulatory environments and can live with restrictions.
"I am sure that the level of sales of their products in India largely offsets the restrictions," she added.
Continuity or change?
Investors will remain attentive until the end of the poll and the election of the new Indian party leader on May 23. Regardless of the winner, the business will probably not have the same momentum as the past five years.
Modi might be inclined to turn slightly backward if he wins a second term, with a drop in farm incomes and slow job growth among the main criticisms made against his government.
"Modi's second term would focus more on the rural economy and job creation rather than radical reforms," Kishore said. "The pace may not match that seen in the early years of his first term."
A change of government would also be considered with caution. Modi's main opposition, the Indian National Congress, has also focused on national issues such as agriculture, employment and social protection programs. in his manifesto published last week.
"A new leader is likely to prolong investors' uncertainty," added Kishore.
Nevertheless, badysts expect India to remain open to global investors, no matter the leaders. And the country's huge market, which has 1.3 billion inhabitants, could just be too tempting.
"In general, both sides are on the same wave length to attract foreign investment and increase employment," Saha said. "Whichever government is formed … we have the human capital, our highly skilled workforce is truly qualified and, in that sense, we are an attractive destination in which to invest."
