Growing India clout prompts US, Europe to ignore Modi crackdown

Just hours after Indian tax authorities searched the BBC's offices on Tuesday, Prime Minister Narendra Modi held phone calls with Joe Biden and Emmanuel Macron touting record orders of 470 planes by Air India Ltd. 

The juxtaposition, intentional or not, marked a vivid demonstration of Modi's success at leveraging India's geopolitical position and economic promise to maintain good relations with the US and its allies even as his government becomes bolder in cracking down on dissent at home. 

The BBC probe, which continued on Wednesday, came weeks after the British broadcaster aired a documentary examining Modi's role in deadly 2002 riots in his home state of Gujarat. Although the government sought to frame the move as unrelated to the documentary, his Bharatiya Janata Party held a news conference the same day in which a representative called the BBC "the most corrupt corporation in the world." 

"India is a country which gives an opportunity to every organization and individual as long as you are willing to abide by the constitution of the country and you don't have a hidden agenda," BJP spokesperson Gaurav Bhatia told reporters. "As long as you don't spew venom."

The pressure on the BBC represents an escalation of Modi's efforts over the past decade to snuff out dissent. In 2021, the Washington-based group Freedom House downgraded India to "partly free" from "free" due to discriminatory policies against Muslims and increased harassment of journalists, civil-society groups and other government critics — a characterization that Modi's government has rebutted. 

Even so, Modi has faced few consequences from foreign investors or governments like the US that regularly criticize China over human rights. He's been touting India as the "mother of democracy" while preparing to host world leaders at the Group of 20 leaders summit later this year.

One major reason is that India's geopolitical importance to the US and its allies has only increased as American policy makers seek to thwart Beijing's rise, with an increased focus on the Quad grouping that also includes Japan and Australia. India also remains one of the fastest expanding economies at a time of sluggish growth around the globe.

"The world certainly isn't about to turn on Modi or India," said Michael Kugelman, director of the South Asia Institute at the Washington-based Wilson Center. "On the contrary, most of the international community continues to view India as a strategic player and key trade and investment partner."

Modi's erosion of democratic institutions and appeals to the Hindu majority since he took power in 2014 has only entrenched his power. His party is leading in opinion polls ahead of a national election next year that could see him win a third term in office. 

Global funds pumped more than $11 billion into India's stock market in the second half of 2022, putting its gauges among the world's top performers last year as the MSCI AC World Index sank nearly 20%. A top Goldman Sachs Group Inc. executive said this month the New York-based bank is investing more client money in India and developed markets in Asia-Pacific as interest in China cools.

Still, signs of trouble are evident, leading to some outflows this year. 

India has been rocked in recent weeks after US-based Hindenburg Research accused billionaire Gautam Adani of fraud and market manipulation, wiping out more than $130 billion in market value at one of the country's biggest conglomerates. Adani, who is seen as close to Modi, refuted the allegations and stoked nationalism in a 413-page rebuttal by his flagship company. 

"This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India," Adani said in its response.

Key opposition politicians, who have struggled to compete against Modi's well-funded election machine, sought to highlight links between the prime minister and Adani to try and make up ground in the polls. Modi has maintained a careful silence on both the Adani crisis and on the BBC documentary, floating above the fray as underlings and supporters defend him and go on the offensive.

"India is on the rise, but sinister designs are there to set afloat a narrative," said Vice President Jagdeep Dhankhar. "We cannot allow free fall of doctored narratives to run down our growth story."

A former Indian foreign secretary this week argued that the government should look to boot out some reporters who work with overseas media outlets.

"Foreign journalists especially can't and must not interfere in the domestic politics of another country," Kanwal Sibal said in a television debate about the BBC raid. "And if they do they are liable to be expelled. Freedom of expression right can't be invoked."

The reaction shows that Modi's government is seeking to create a "nationalist battle" in which he protects the population against outside enemies, according to Mohan Guruswamy, a former Finance Ministry official.

"He is trying to create a new narrative that foreigners are against you," Guruswamy said. "These are bad for India's image as a democracy and as an alternative to China."

The BBC documentary India: The Modi Question struck at an issue that has stained Modi's political career. In the 2002 sectarian violence, more than 1,000 people — mostly Muslims — were killed after a train carrying Hindu pilgrims was burned allegedly by a Muslim mob. Human rights groups blamed Modi for doing little to stop the violence, allegations that were denied by him and later dismissed by India's Supreme Court.

When the film was aired in the UK in January — its broadcast was restricted in India — the country's Ministry of External Affairs called it "propaganda." India's government also asked social media giants Twitter Inc. and Alphabet Inc.'s YouTube to take down videos and tweets about the film.

"The bias, lack of objectivity, a continuing colonial mindset is blatantly visible," Arindam Bagchi, a spokesman for India's Foreign Ministry, told reporters last month.

Before his election win in 2014, the US had denied Modi a visa over his alleged role in the Gujarat riots. After the BBC tax probe this week, State Department spokesman Ned Price referred reporters to India's government for more details while making a "general point" about the benefits of press freedom. 

That's more than what the British government offered. As of Wednesday, Prime Minister Rishi Sunak's administration hadn't commented on the BBC probe, which came as India announced the next round of UK trade talks. Several weeks ago, UK Foreign Secretary James Cleverly noted the BBC was independent and called India "an incredibly important international partner." 

"Modi will overcome this moment politically at home just as he has so many other blows," said Kugelman from the Wilson Center. "He is just too popular, and the opposition too weak, for any of this to damage him politically. He'll be fine."

— With assistance by Ishika Mookerjee

Disclaimer: This article first appeared on Bloomberg, and is published by special syndication arrangement.