Modi had a business visa; but his application for a diplomatic visa was rejected without assigning any reason. Probable reasons are: 1. Pressure from Indian government; US was keen to sign the nuclear deal and was willing to bend backwards. 2. Interference from congress/communist/muslim groups in US and threat of demonstrations. Normally, the US government ignores such actions, but not in this case; one can gusess why.
Anyway, the investment comes from US corporates and not from US government; they know the benefits of investment and will definitely come in droves.