Foreign businesses still struggle in India
NEW DELHI: Narendra Modi was elected two years ago this week promising to ease India’s notorious red tape and unpack regulatory tangles, but for world’s fastest-growing large economy can still be a costly headache.
With a billion consumers and rising middle class, India holds dazzling potential—yet despite signs of corporate tussles continue to bamboozle investors.
British firms Cairn Energy and Vodafone have this year been hit with fresh bills for billions of dollars in backdated tax and threats of asset seizure linked to long-running disputes.
Agribusiness giant Monsanto in March threatened to pull out of India over government plans to slash cotton seed royalties paid by help farmers.
And two major American business bodies this month voiced disappointment with the glacial pace of market reforms.
In a submission to the US commerce secretary, the National Association of Manufacturers urged Washington to press for change during a visit by Modi in June.
“Despite statements made by Prime Minister Modi and other senior In there has been limited progress in many key areas that make it challenging to do business in India,” the group wrote.
Modi took power after winning elections in May for business”, seeking to replicate an impressive economic track record as chief minister in Gujarat and speed up a market opening that began 25 years ago.
The potential is breathtaking: India’s population will overtake China’s within six years and com according to the UN.
on the World Bank’s Ease of Doing countries.
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“It is a hassle, it’s a pain, the amount of (tax) bills we get, the number of licenses we need,” the India head of one major European retailer told Agence France-Presse on condition of anonymity. “Any store that we open, there are between
tax law has not been repealed, with telecoms giant Vodafone and oil explorer Cairn charged billions over previously cleared dealings.
said on more than one occasion that retrospective taxes have been an own goal,” Naushad Forbes, president of the Confederation of Indian Industry, told AFP. “They ruin our reputation and don’t bring us any revenue.”
Trade remains a bugbear, with US exporters to India lamenting eye-wateringly high tariffs and protectionist restrictions, and years-long talks with the EU all but stalled.
level (is) that the Modi government is very pro-investment but at the same time, very anti-trade access,” said Richard Rossow of the Center for Strategic and International Studies (CSIS) in Washington.
Even Facebook— personally courted by tech-loving Modi in Silicon Valley—ran into trouble with Free Basics, an initiative to give limited free internet to the poor.
After Indian entrepreneurs railed against corporate paternalism, Free Basics was blocked by the telecoms regulator, in a ruling ostensibly over data pricing.
Some suggest India’s buoyant economy, expected to have grown nationalist tendencies.