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

WHO: Anti-Ebola Efforts Should Focus on West Africa

Official says WHO is 'reasonably confident' countries bordering those hardest hit by the Ebola outbreak are not seeing the virus crossing their borders More

South Sudan Crisis Threatens Development

Economic costs and lost development opportunities in South Sudan have erased what little progress the country has made since independence in 2011 More

Ukraine PM Warns Russia May Try to Disrupt Sunday Poll

Arseniy Yatsenyuk orders full security mobilization for parliamentary election to prevent ‘terrorist acts’ from being carried out More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
After Decades of Pressure, Luxembourg Drops Bank Secrecy Rulesi
X
October 21, 2014 12:20 AM
European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.
Video

Video Young Nairobi Tech Innovator on 'Track' in Security Business

A 24-year-old technology innovator in Nairobi has invented a tracking device that monitors and secures cars. He has also come up with what he claims is the most robust audio-visual surveillance system yet. As Lenny Ruvaga reports from the Kenyan capital, his innovations are offering alternative security solutions.
Video

Video Latinas Converting to Islam for Identity, Structure

Latinos are one of the fastest growing groups in the Muslim religion. According to the Pew Research Center, about 6 percent of American Muslims are Latino. And a little more than half of new converts are female. VOA’s Carolyn Presutti travelled to Miami, Florida -- where two out of every three residents is Hispanic -- to learn more.
Video

Video Exclusive: American Joins Kurds' Anti-IS Fight

The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video South Korea Confronts Violence Within Military Ranks

Every able-bodied South Korean male between 18 and 35 must serve for 21 to 36 months in the country’s armed forces, depending upon the specific branch. For many, service is a rite of passage to manhood. But there are growing concerns that bullying and violence come along with the tradition. Reporter Jason Strother has more from Seoul.
Video

Video North Carolina Emerges as Key Election Battleground

U.S. congressional midterm elections will be held on November 4th and most political analysts give Republicans an excellent chance to win a majority in the U.S. Senate, which Democrats now control. So what are the issues driving voters in this congressional election year? VOA National Correspondent Jim Malone traveled to North Carolina, one of the most politically competitive states in the country, to find out.
Video

Video Comanche People Maintain Pride in Their Heritage

The Comanche (Indian nation) once were called the “Lords of the Plains,” with an empire that included half the land area of current day Texas, large parts of Oklahoma, New Mexico, Kansas and Colorado.The fierceness and battle prowess of these warriors on horseback delayed the settlement of most of West Texas for four decades. VOA’s Greg Flakus reports from Lawton, Oklahoma, that while their warrior days are over, the 15,000 members of the Comanche Nation remain a proud people.
Video

Video Turkey Campus Attacks Raise Islamic Radicalization Fears

Concerns are growing in Turkey of Islamic radicalization at some universities, after clashes between supporters of the jihadist group Islamic State (IS) or ISIS, and those opposed to the extremists. Pro-jihadist literature is on sale openly on the streets of Istanbul. Critics accuse the government of turning a blind eye to radicalism at home, while Kurds accuse the president of supporting IS - a charge strongly denied. Henry Ridgwell reports from London.

All About America

AppleAndroid

World Currencies

EUR
USD
0.7878
JPY
USD
106.98
GBP
USD
0.6230
CAD
USD
1.1220
INR
USD
61.226

Rates may not be current.