Just a few days back, India was ranked quite low on the Ease of Doing Business index released by the World Bank. As reported in the Business Standard, its overall rank in Ease of Doing Business dropped from 131st position in 2013 to 134th in 2014. India also fared the worst when compared to its BRIC peers. Indeed, it was placed at 179th position, while Russia was at 88th, Brazil at 123rd and China at 158th.
Indra Nooyi, CEO of Pepsico, also offered her views on the ease of doing business in the country. According to her, India is a 'must-deal with' country rather than 'must invest' in country. The latter means that GDP is growing and the climate is conducive to conduct business. Whereas the 'must deal with' terminology implies that foreign investors wanting to invest in the country will have to deal with issues on the infrastructure and regulatory front. Thus, would it make sense for a foreign investor to pour funds into the country if risks outweigh returns?
So what makes doing business so difficult in India? The problems are quite well known. Poor infrastructure, uncertainty surrounding tax policies, land acquisition hurdles....the list is endless. Infact, quite a few honchos of India Inc. have publicly stated their intention of investing overseas given the lack of reforms in the country.
The problems that India faces currently are no different than in the past. But the country's aspirations over the years have changed as has the perception of the outside world towards it. The 9% plus GDP growth for 3 consecutive years before the crisis made the world sit up and take notice of India. It became a land of countless opportunities. Even after the crisis struck, the economy bounced back in the subsequent couple of years. As a result, the government too harbored ambitions of the economy growing at a consistent rate of 8%. And foreign investors followed in droves, looking to capitalise on an opportunity at a time when the developed countries were down in the dumps. Thus, these years were the perfect time for the government to begin its reforms process. Instead it remained complacent and chose to sit back on the wrong notion that the buoyancy would continue forever. Now it has to pay a heavy price.
Not much can be expected before the elections next year. But once that is over, the new government will have to seriously get its act together and restore the faith of investors in the Indian economy.
Do you agree with Indra Nooyi's views that India is a 'must deal with' country rather than a 'must invest in' one?
Indra Nooyi, CEO of Pepsico, also offered her views on the ease of doing business in the country. According to her, India is a 'must-deal with' country rather than 'must invest' in country. The latter means that GDP is growing and the climate is conducive to conduct business. Whereas the 'must deal with' terminology implies that foreign investors wanting to invest in the country will have to deal with issues on the infrastructure and regulatory front. Thus, would it make sense for a foreign investor to pour funds into the country if risks outweigh returns?
So what makes doing business so difficult in India? The problems are quite well known. Poor infrastructure, uncertainty surrounding tax policies, land acquisition hurdles....the list is endless. Infact, quite a few honchos of India Inc. have publicly stated their intention of investing overseas given the lack of reforms in the country.
The problems that India faces currently are no different than in the past. But the country's aspirations over the years have changed as has the perception of the outside world towards it. The 9% plus GDP growth for 3 consecutive years before the crisis made the world sit up and take notice of India. It became a land of countless opportunities. Even after the crisis struck, the economy bounced back in the subsequent couple of years. As a result, the government too harbored ambitions of the economy growing at a consistent rate of 8%. And foreign investors followed in droves, looking to capitalise on an opportunity at a time when the developed countries were down in the dumps. Thus, these years were the perfect time for the government to begin its reforms process. Instead it remained complacent and chose to sit back on the wrong notion that the buoyancy would continue forever. Now it has to pay a heavy price.
Not much can be expected before the elections next year. But once that is over, the new government will have to seriously get its act together and restore the faith of investors in the Indian economy.
Do you agree with Indra Nooyi's views that India is a 'must deal with' country rather than a 'must invest in' one?
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