Uncertainty, delay in approvals increase business cost, says industry

However, showed optimism that things had started changing in India lately

The industry today stressed the need to speed up decision-making in the government and facilitate single window clearance 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 for giving various approvals.

“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 NV 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 are major issues 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 the government is worried about execution of things involving multiple ministries. I believe something will be done soon,” said Massey. He though admitted expecting that something would 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 as despite all the challenges it remained one of the most attractive markets from the perspective of multinational companies.

“When you have multiple windows that not only imposes cost but also causes uncertainty. Single window helps in expediting the process and cost of time,” he cautioned.

Giving example of a Special Economic Zone 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 as per a survey by International Finance Corporation, the private sector lending arm of 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 (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 slowest growth in 10 years, corruption and policy inaction as the biggest problems. Despite that he added India would grow as it is too important a market for people to stay away.