Industry assails uncertainty
Industry today stressed the need to speed up decision-making in the government and facilitate single window clearances in order to attract investors to the country.
At a session on ‘Risk or Return: Solutions to Restoring Investor Confidence’, all the speakers unanimously agreed there was a lot of uncertainty with regard to doing business in India, and that the government must understand the need to bring down the time required for giving various approvals.
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“Time is certainly not being valued today. Sometimes it’s not known at what level the decision would be taken. One doesn’t really know where the buck stops. It has to be resolved by the government," said Joseph Massey, Managing Director of MCX Stock Exchange. Genpact President N V Tyagarajan also admitted that though India is one of the best markets in the world in terms of talent and the ability to learn, one doesn’t know how much time it would take to secure an approval from the government.
“Importance of time is being misunderstood. Importance of speed is not understood. Emerging markets today are all competing on speed and we are losing that edge," he said. Vasant Prabhu, Vice Chairman of Starwood Hotels & Resorts, USA, also expressed similar views. He said uncertainty with regard to cost, time and legal framework would be the single major issue on investing in India.
The industry, however, showed optimism that things had started changing lately and the government was expected to address at least some of the concerns soon.
“We are increasingly seeing that the government is worried about execution of things involving multiple ministries. I believe something will be done soon," said Massey. He admitted though, that expecting something to change overnight would be a tall order, as there are three levels of hierarchy — Centre, state, and local municipal bodies — as far as approvals are concerned for a business.
Anil Gupta, Michael Dingman Chair in Global Strategy & Entrepreneurship, University of Maryland, said this could be the golden moment for India because, despite all the challenges, it remained one of the most attractive markets for multinationals.
“When you have multiple windows that not only imposes costs but also cause uncertainty. A single window helps in expediting the process and cost of time," he cautioned.
Giving the example of a Special Economic Zone that China set up in collaboration with Singapore about 20 years ago, Gupta said India could also explore joint ventures in other countries in various fields, as this could be a good learning opportunity.
India is ranked 132 out of 185 countries in terms of ease of doing business, according to a survey by the International Finance Corporation, the private sector lending arm of the World Bank. Asian peers like Sri Lanka, Bangladesh and Nepal are ahead of India.
“Everyone wants the government to stay out of their way. Retrospective taxation (imposed in the Budget) spooked everyone internationally," said Neeraj Bhardwaj, Managing Director, Carlyle India Advisors.
He said in a poll of 700 partners recently, most listed the slowest growth in 10 years, corruption and policy inaction as key problems — yet, India would grow, as it is too important a market for people to stay away.