Ahead of Narendra Modi's widely-expected unveiling as Indian Prime Minister on Friday 16 May, Dr Mohan Kaul, Chairman Emeritus of the Commonwealth Business Council details the hopes and expectations of foreign investors.
Right now, all eyes are on India and on the Indian election results.
The new government and its policies will have a far reaching impact – not only on how India will shape up over the next five years but also on what role various foreign investors and the Diaspora will play in the growth story of India.
Hence, I am pleased to note that at least one of the three main leaders of the contending parties has decided to put the economy at the centre of his political agenda.
As an international businessman, a facilitator of international trade and a firm believer in liberalisation for economic growth, I truly believe that what India needs today is the creation of a business environment that is conducive for trade – both domestic and international.
India’s GDP growth has slipped below 5%, inflation peaked in double digits before marginally declining and the fiscal and current account deficits have widened sharply.
If India doesn’t make regulatory and structural changes, it will fail to live up to its true potential. To achieve the desired economic growth India will need substantial flow of FDIs.
British and foreign businesses have confidence in India but they need to see the right signals, in order to increase investment into the country. They want a government which will cut red tape and increase liberalisation.
Reforms required to make India an immediately attractive foreign investment destination include removing retrospective tax rules, pushing for faster clearances and regulations, and rolling out nationwide Goods and Services Tax.
The single biggest factor causing India to languish in 134th position out of the 189 countries in terms of ease of doing business according to The World Bank report is its inconsistency in policy making.
Be it multi-brand retail, or retrospective tax, there have been several policy flip flops.
Forcing a $2 billion tax bill on to Vodafone was a major setback in positioning India as an investor friendly destination. To make India attractive to foreign investors, the new government has to win the confidence of foreign business by removing the red-tape and easing bureaucratic hurdles.
Of the three leaders of the main contending parties, Mr NarendraModi is the only one who has a proven track record of cutting red tape and being pro-business. I have known Mr Modi for more than 15 years and have led several British and Commonwealth business delegations to the “Vibrant Gujarat” event that he hosts.
Where he succeeded in attracting foreign investors and businesses, other chief ministers have struggled. So, I hope if he becomes the next Prime Minister of India, he will stick to his pro-business agenda.
What I find most admirable about him is that he has stuck to the agenda of development and governance during the election campaign.
Even in Benares, where political messages inevitably sink into religious stereotypes, he talked about getting technology to the local weavers, largely Muslims, so that they can compete against Chinese competition.
So with a pro-business leader in the government and clear, simple regulatory changes, I hope to see India move up the World Bank’s league table of the best places to do business, at least within the top 100.
I am confidant Indian voters will make the right choice.
- Dr Mohan Kaul is Chairman of the Commonwealth Investment Corporation and Chairman Emeritus of the Commonwealth Business Council. He has been a member of the Presidential Advisory Councils of Mozambique, Uganda, Tanzania, Ghana, Nigeria and Zambia. He is also a member of the Advisory Council of British Expertise.BLOG COMMENTS POWERED BY DISQUS