BY B SHEKHAR
India, projected to be the third largest economy and consumer market by 2030, has emerged as one of the hot investment destinations for overseas investors, more so NRIs, with the Central government along with the state governments effecting a multitude of procedural and administrative policy changes to transform the business environment in the country
In a recent interview, Richard Heald, executive chair, UK-India Business Council, said: “India today presents a great investment destination to any international business, thanks to its large economy, huge consumer market, and abundant skills and talent. What is even more exciting though is the potential. Economists predict it will be the world’s third largest economy and third largest consumer market by 2030. Strengths in
manufacturing, digital, IT, and across the economy are increasingly evident and as such it is an extremely exciting place to be.”
Similarly, a recent survey by Deloitte Touche Tohmatsu India LLP states that India is an attractive investment destination for developed economies as 44 percent of 1,200 global business leaders based in the US, UK, Japan and Singapore plan to make additional or first-time investments in the country, but more business leaders find India lucrative for its domestic market rather than as a hub for exports.
The statement by Heald and the findings of the Deloitte survey literally sum up the epithet that India is turning out to be a hot investment destination, what with the Government of India along with state governments’ support effecting a multitude of procedural and administrative policy changes in the past few years. The nation is slowly but surely on the path of scrapping several archaic laws which have lost relevance in the neo global business village concept.
The recent positive measures include simplifying ease of doing business parameters, reduction in tariffs, lowering of investment cap, greater alignment of standards and simplified procedures on a par with First World nations, focus on innovation, R&D and faster tech adoption, relaxed FDI norms across mission-critical sectors, framing of data protection rules and IP practices, and matching of a slew of other laws and procedures to global standards so that doing business in India is the same as any other nation as far as level playing parameters are concerned. For instance, the introduction of Simplified Proforma for Incorporating Company Electronically (Plus) or SPICe+ and AGILE PRO form by the Ministry of Corporate Affairs (MCA) saves not only time but also effort required for nascent company incorporation. This form combines various
services like PAN/TAN/DIN (Director Identification Number)/GSTN, etc.
Similarly, with effect from April 1, 2021, NRIs can incorporate one person companies (OPC) in India. NRIs can also form partnership firms where the firm should have at least one resident Indian partner. They can also open a private limited company or a limited liability company. A private limited company is the most viable in legal terms. With the government encouraging foreign investment and there being no dearth of talent and inexpensive labour in India, setting up business here has become an attractive proposition.
Another policy initiative is faster resolution of commercial disputes so as to boost investor confidence in the dispute resolution mechanism of the country. Dedicated Commercial Courts have been established in Delhi and Mumbai, dealing exclusively with commercial cases. Adoption of technology for case management by lawyers and judicial officers is leading to speedier dispute resolution which was a major deterrent for
A recent phenomenon which is being noted by corporate circles is that bureaucracy and political mandarins have now begun to listen and seek feedback directly from the stakeholders, which hitherto was unheard of. Almost all core sector departments like finance, commerce, agriculture, information technology, chemicals, tourism, heavy industries et al are in touch with corporate honchos at regular intervals to discuss pain points holding up sectoral growth. The problems can be redressed in the form of policy inclusion or procedural and administrative amendments, unlike earlier when a particular lobby would push the agenda.
Earlier, it was only a chai-biscuit meeting formality with corporate leaders while, as always, the lobby would have its say. But now it is the interests of the economy and the nation that come first and all policy initiatives effected are well within the framework of law, without deviating or yielding to the lobbies’ pulls and pressures.
This radical departure is bringing in a sea change in the operational aspects of various crucial industry departments, which many of the head honchos are now not shying away from appreciating openly, be it in domestic or overseas forums. This paradigm shift is now seeping into the
psyche of the overseas investors, more so the NRIs, encouraging them to put their money where the returns on investment will not only be protected but actually grow manifold in just a few years.
This is evident from the fact that India has been able to attract FDI amid the ongoing Covid-19 pandemic. Due to the economic priority shift from China and a geopolitical tilt towards India, First World nations are now moving their core manufacturing activities into India. The country is now poised to capture a big slice of the global manufacturing space.
India, as the sixth largest economy in the world, is characterised by an exponential consumer base, making it the “most desirable and preferred” place for potential investors. In September 2021, Deloitte CEO Punit Renjen revealed that in a survey of 1,200 business leaders, over two-fifths of the leaders in the US, the UK, Japan and Singapore were planning first-time investments in India or to pump up their existing investments in the country. He added that India continues to be “one of the most attractive” FDI destinations. A rising young population, technology skillsets in the labour force, liberalised FDI norms, and cheap and abundant labour are some of the lucrative factors that attract FDI in India.
According to the report, India can attract greater FDI into seven capital-intensive sectors, namely, textiles and apparel, food processing, electronic goods, pharmaceuticals, vehicles and auto parts, chemicals and active pharmaceutical ingredients, and capital goods, that
contributed $181 billion of merchandise exports in 2020-21. Such investments will help improve the export growth of these sectors by six times to $1,075 billion by FY2026-27, the Deloitte research indicates.
In conclusion, more reforms can be expected as they are now on the fast track. The government is integrating several policies that seamlessly align with global standards and business practices so as build confidence among the investing community that “India means business”.
Moving forward, various ministries, departments and officials continue to reiterate their commitment to upholding the ease of doing business policy and are willing to engage with businesses, listen to feedback and work on it. Put simply, it all now translates to: “Better the operating
environment, greater the level of investments.”
The writer is a Bengaluru-based senior business journalist