India's GST move makes it attractive to foreign firms: Chinese daily

Implementation in country's 29 states would not be easy due to regulatory challenges

India is becoming more attractive to foreign firms but its path of reforms, including the implementation of the GST, will not be easy, an article in a state-run Chinese daily said on Tuesday.

"As low-cost manufacturing is gradually moving away from China, it is now critical for India and even the world whether it can replace China as the next 'world's factory', an article in the Global Times said.

The Indian government has rolled out "aggressive reforms" aimed at unifying the country's market, which is very attractive in the eyes of international investors, even though there are huge challenges such as poor infrastructure and difficulties in policy implementation across different states, the article opined.

Referring to the commitment by Foxconn and Midea to invest in India, it said these investments are coming close on the heels of India's decision to implement the Goods and Services Tax (GST), the country's biggest tax reform since its independence in 1947.

"The new tax regime is expected to give a boost to the 'Make in India' initiative because it is aimed at unifying various state and central taxes into a single tax system, thus laying the foundation for a common national market and improving India's manufacturing competitiveness," the article said.

"In fact, since Prime Minister Narendra Modi launched the 'Make in India' initiative in September, 2014, the Indian government has been making aggressive efforts in unifying the country as a whole, with the aim of building it into an attractive manufacturing destination for global businesses," it said.

The article, however, cautioned that it will not be easy for India to achieve its goal.

It stated that regulatory and bureaucratic challenges across the country's 29 states meant that the implementation of the reform measures will be far from simple, while poor infrastructure and cultural complexity may also undermine India's advantage in terms of cheap labour.

"Obviously, India is at a critical juncture for market opening-up and unification, which requires strong faith and assertiveness. Whether it can eventually pull off the current tasks will depend on whether the Modi government is steadfast in pushing forward with its reform programme," it said.