Applauding India’s recent decisions to pass the national bankruptcy law, release of National Intellectual Property Rights policy and several steps taken over the last two years on ease of doing business, Arun M Kumar, Director General, US and Foreign Commercial Service, and Assistant Secretary, Global Markets, US Department of Commerce called for tangible progress in India’s business climate along with harmonisation of product standards with international rules in order to enhance its position in the global supply chain.
“Many US companies are increasingly optimistic about the shift in tone, but are waiting to see further tangible progress in India’s business climate. Even as some states have moved swiftly up the rankings, India still ranks lowest among the G20 countries on the World Bank’s 2016 Doing Business report,” said Kumar.
Speaking at an even organised by Yes Bank in association with Indo-American Chamber of Commerce, Kumar said that India also needs to remove obstacles for companies to come and operate in India.
“To enhance its position in global supply chains and deepen its integration with the world economy, India will need to harmonise product standards with international rules. Standards barriers — such as certain testing, certification, and registration requirements — not only pose obstacles to US companies, but hamper the pace of India’s integration into the global economy,” he said.
Kumar, however, praised India’s decision to pass the bankruptcy law and release of NIPR policy, saying it said will foster innovation and will also centralise the copyright and patent regimes under DIPP and improve coordination between the center and states on compliance.
Kumar also took note of other economic reforms done by India such as — streamlining bureaucratic decision making; opening investment in railways, defense and e-commerce; step towards growing its civil nuclear market by ratifying the CSC in line with international rules on liability — and said that the American companies have responded to them and invested more in Indian equities than in China.
“Over the last two years, US businesses invested over $15 billion in India, and will reportedly sign deals worth another $27 billion over the next two years,” said Kumar.
He, however, pointed that India needs to a lot more in order to provide employment to nearly one-million people that come to Indian cities every month.
“India needs to further accelerate inward investment, which in turn will require additional measures to increase bilateral trade… High tariffs, localisation requirements, and other trade barriers and policies remain a significant challenge,” he said.
Speaking at the event, Banmali Agrawala, president and CEO of GE South Asia also highlighted the need to eliminate the inefficiencies in the system. Pointing that India needs to continue on what it has done over the last couple of years, Agrawala said, “Since it is government spending that is driving growth, the processes needs to be smoother, faster and predictable so that it results into clear action.”
Both Bhaskar Pramanik, chairman, Microsoft India, and Agrawala raised their concerns over the unpredictable taxation in India. “The retrospective tax has still not disappeared. Tax is a sword that hangs over our heads, suddenly the rules change and it is retrospective,” said Pramanik.
Agrawala also said that foreign investors need comfort on a predictable tax regime and pointed that if there is certainty, they will look to make India as a base for their global operations.