While policy is clearer and more predictable, and more transparent, the actual pace of implementation is choppy ‘Foreign Investors Want More Clarity on Tax Matters, IP’
Foreign investors see a real opportunity in India, but policy implementation needs to pick up pace, says MasterCard CEO Ajay Banga. Speaking to ET’s Romit Guha, Banga says the Vodafone retroactive case is still unresolved while the goods & services tax (GST) is yet to be implemented. Besides a stable public policy, overseas investors want more market access in areas such as legal. Banga also questioned the government’s decision to choose local rival RuPay as partner for Jan Dhan Yojana, saying all players should be given a fair chance to compete. Edited excerpts:
How does India look from overseas as an investment destination? In corporate boardrooms in America, the joke used to be, ‘When you shake hands with the senior leadership of China, they roll out the red carpet over there… whereas when you shake hands with the senior official of India, they roll out the red tape.’ People today are talking of India being a real opportunity.
What are the challenges for India on the economic front? Retroactive taxation has single-handedly created the most angst in people’s minds. So, the biggest challenge is predictability and consistency of public policy. But now, while policy is clearer and more predictable, and more transparent, the actual pace of implementation is choppy. The one thing we are keen on is increasing the pace of this implementation over 4-5 years. I understand all the political reasons for it. But I (as a foreign investor) don't care. I am saying finish the fighting – give me GST. The Vodafone case is still bubbling around. But now the finance minister has made an offer.
How has that offer been perceived by foreign investors? The government is trying to clear up past history, in a way that enables it to move forward.
What are the major economic steps needed going forward? Further clarity on tax matters. Clarity on intellectual property (IP). Market access. India doesn’t allow overseas law firms. It’s all these ancillary services that enable an environment where investors feel comfortable to come in.
Do debates around topics like religious intolerance concern the business community? Yes it definitely does. But this kind of problem happens everywhere.
What is the outlook for MasterCard? Comment on growing competition, from say digital wallets. Over the next three-four years, we can continue to deliver lower double-digit revenue growth, on an average. I can grow my EPS (earnings per share) around the mid-teens. Now everybody is launching digital wallets. But in all of them, the need to provide an outstanding consumer experience and a safe and secure connection though millions of merchants through banks in 200 countries, meeting local regulations. That's the real payment system. In that, MasterCard has a role to play. It's about making cash the competitor. 1-1.5 % of GDP goes into managing cash. In India, .₹ 21,000 crore is spent a year by the RBI (Reserve Bank of India) and commercial banks - on printing, securing, distributing and managing currency operations.
Do you have plans to launch a digital wallet? I am not a B2C (business-to-consumer) company - I am a B2B (business-to-business) company, B-to-B-to-C is what I am willing to call myself.
Can you talk about the India opportunity for MasterCard? It's not one of our top 7-8 markets. India still has a very large cash economy. Between 1% and 2.5%-3% of Indian retail payments are electronic. So, the opportunity in India is to grow that from 99% - to 98%, (then) my business doubles. We have invested .₹ 1600 crores in India since Prime Minister Narendra Modi came into power. I now have 12% of my 12,000-plus global workforce in India.
What is your view on RuPay being selected for Jan Dhan Yojana (JDY)? All I want is a level playing field.