News / Economy

India Woos Investors with Promises to Transform Business Environment

FILE - Indian stockbrokers celebrate as they watch the Bombay Stock Exchange (BSE) index on their trading terminal in Mumbai, India.
FILE - Indian stockbrokers celebrate as they watch the Bombay Stock Exchange (BSE) index on their trading terminal in Mumbai, India.
Anjana Pasricha
India’s new government has promised to transform the country’s business environment as it woos investors in a bid to revive the stalled economy. Investor interest in India has declined in recent years because of the tough challenges of operating in the country.
 
New Delhi-based Orient Craft is one of India’s largest apparel exporters, employing over 20,000 workers.
 
Its commercial head, A.K. Jain, can reel off any number of hurdles to doing business in India - whether it is cumbersome regulations, inflexible labor laws, or erratic power supply. He cites one example: all fabric he imports must go through a test known as the hazardous chemical users test to make sure it is safe for human beings. He said this test is not mandatory in other apparel exporting countries.
 
Jain said he wants to see India’s new government cut through the maze of archaic rules and "red tape" that deter businessmen.
 
“We want to enjoy the freedom like we are working in free zones of UAE or other countries where we don’t have any bureaucratic red tapism - it’s very important, number one, the conductive atmosphere in the government machinery. That’s big headache. You are creating barriers with the notional fears. They are non tariff barriers,” said Jain.  
 
India’s new, pro-business Prime Minister Narendra Modi has promised to make the going easier for foreign and domestic investors, and emulate the business-friendly policies of Gujarat state that he governed for 12 years.
 
The example often cited is that of a factory set up by the Tata company to produce the Nano car. After the company had to abandon its factory in West Bengal state due to farmers’ protests at the takeover of their land, Modi sent a text message to the then chairman, Ratan Tata: “Welcome to Gujarat.”
 
Land, power and loans for the car plant were arranged in three days. The factory was up and running in Gujarat in less than two years - a record for India. Today the Nano car plant employs about 10,000 people.
 
Optimism has swept the business community on hopes that the same administrative efficiency will be replicated in other places.
 
A beginning has been made. The new buzzwords in New Delhi’s corridors of power are transparency and faster decision making. Several related ministries, such as road transport, highways and shipping, which used to be separate portfolios, are now under one minister to improve efficiency. The government also has signaled broad economic reforms, such as opening once-protected sectors like defense production to foreign investors.
 
In an address to parliament, President Pranab Mukherjee spelled out the government’s intentions.
 
“Efforts will be made to eliminate obsolete laws, regulations, administrative structures and practices…. It will strive to move to a single window system of clearance both at the center and at the states,” said Mukerhjee.
 
Implementing new policies, however, may not be easy. Although Modi’s Bharatiya Janata Party has won a majority in the lower house of parliament, it does not have control of the upper house. And many investment-related decisions rest with states where his party is not in power. 
 
But change is urgently needed in a country whose ranking in the World Bank’s “ease of doing business” survey is 134 among 185 nations -- lower than emerging economies such as Brazil and South Africa. And whereas other Asian countries such as Malaysia have steadily improved their position, India slipped last year.
 
The evidence for this: some 250 stalled projects, estimated at over $200 billion, are tangled in a mix of bureaucracy, corruption allegations or lack of clarity on policy. Many are in crucial sectors such as coal, steel and power.
 
The chief economist of the ratings agency CRISIL in Mumbai, D.K. Joshi, said the government must ensure speedy clearances for these stuck projects to send the right signals to investors.
 
“We all know that the power projects are not doing well because there is not enough coal available. So if coal is debottlenecked even a little bit, that is going to have a positive effect. There are many other such low hanging fruit, which only require administrative efficiency or quick decision making to sort out. First of all you need to improve the efficiency of the existing investment,” said Joshi.
 
Foreign investors say India’s big market is a huge draw, but the hurdles are too many. From getting land and energy, construction permits or enforcement of contracts, they say operating in India is hugely cumbersome. Archaic labor laws discourage labor-intensive manufacturing industries. Two years ago, foreign investors were spooked by retroactive changes in tax laws that imposed an unexpected burden on many businesses. India fell off the map of many potential investors.
 
“They want to put money in India, but money in India subject to many things. They understand this is going to be a huge story, but they get stumped by this stuff that goes on, on the ground problems. We really need good execution skills, moving the bureaucracy, simplifying the rules,” said Girija Pande, chairman of Apex Avalon Consulting, a Singapore-based company which advises foreign investors exploring opportunities in India. 
 
Pande said the next few months will be crucial as investors wait to see if the government will "walk the talk" on its business-friendly intentions.

You May Like

Obama: Alaskans Feel Signs of Climate Change

They're seeing bigger storm surges as sea ice melts, more wildfires, erosion of glaciers, shorelines More

Katrina Brought Enduring Changes to New Orleans

The city’s recovery is the result of the people and culture the city is famous for, as well as newcomers and start-up industries More

Magical Photo Slides Show Native Americans in Late 1800s

Walter McClintock spent 20 years photographing the Blackfoot Indians and their vanishing culture at the dawn of the modern age More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Colombians Flee Venezuela as Border Crisis Escalatesi
X
August 27, 2015 2:08 AM
Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Is China's Economic Data Accurate?

Some investors say China's wild stock market gyrations have been made worse by worries about the reliability of that nation's economic data. And some critics say the reports can mislead investors by painting an unrealistically-strong picture of the economy. A key China scholar says Beijing is not fudging ((manipulating)) the numbers, but that the economy is evolving quickly from smoke-stack industries to services, and the ways of tracking new economic activity are falling behind the change. V
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Shipping Containers Provide Experimental Housing

Housing prices around the San Francisco Bay area are out of reach for many people, so some young entrepreneurs, artists and tech industry workers are creating their own houses using converted shipping containers. But as VOA's Mike O’Sullivan reports from Oakland, the effort requires ingenuity and dealing with restrictive local laws.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video Technique May Eliminate Drill-and-Fill Dental Care

Many people dread visiting dentists because they're afraid of drills. Now, however, a technology developed by a British firm promises to eliminate the need for mechanical cleaning of dental cavities by speeding a natural process of tooth repair. VOA’s George Putic reports.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.
Video

Video French Experiment in Integrating Roma Under Threat

Plans to destroy France’s oldest slum have sparked an outcry on the part of its Roma residents. As Lisa Bryant reports from the Paris suburb of La Courneuve, rights groups argue the community is a fledgling experiment on integrating Roma who are often outcasts in many parts of Europe.
Video

Video Kenyans Turn to Agriculture for Business

Each year Kenyan universities continue to churn out graduates for the job market despite the already existing high rate of unemployment among youth in the country. Some of these young men and women have realized that agriculture can be as rewarding as any other business or job, and they are resorting to agribusiness in large numbers as a way of tackling unemployment. Rael Ombuor reports for VOA.
Video

Video First Women Graduate Elite Army Ranger School

Two women are making history for the U.S. Army by proving they are among the toughest of the tough. VOA's Carla Babb reports from Fort Benning, Georgia as 94 men and those two women rise as graduates of the difficult Ranger school.

VOA Blogs

World Currencies

EUR
USD
0.8874
JPY
USD
120.83
GBP
USD
0.6497
CAD
USD
1.3271
INR
USD
66.162

Rates may not be current.