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’

The Economic Times - - Companies -

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.

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