New Delhi: India has already positioned itself and continues to enhance its attractiveness as a desired destination for investment and trade, according to the Doing Business in India report.
Whilst its expanding levels of intellectual capital and large English-speaking population are likely to make it a global hub for services, high levels of domestic consumption coupled with significant cost competitiveness, along with a global demand of shift in supply chain outside of China, makes India an ever attractive destination for investments in services and manufacturing, the report said.
"Modi government's policies of smart cities, Digital India, single window policy have given the correct signals to all. Also the government's mantra of "ease of doing business" has brought about many reforms which will work towards changing the perception about doing business in India," it added.
The testimony of which is an ever improving rank of India in the annual World Bank's ease of doing business report. More and more ministries are moving towards online access for granting licenses/ approvals/ registrations/ reporting etc. and single window clearance.
The report said that while corruption still exists, the continued enhancement and expansion of digitisation and computerisation of numerous public bodies has led to an increased level of efficiency and institutions such as the RBI and SEBI have become increasingly proactive and professional in dealing with foreign investment into India.
Furthermore, some state governments have taken proactive steps to improve efficiency in public offices such as the RoC. "While caution exercised by them may seem draconian; it has helped India tremendously in avoiding any major internal impact of the ongoing financial crisis," it added.
India's middle class, its prime consumer market and responsible for over half of Indian economy's GDP in the form of private spending, is estimated to cross 250 million in number. Furthermore, India's population remains largely of working age and relatively young, unlike China, which with its 'one-child' policy has resulted in a smaller working population supporting a growing number of retirees.
The report identified that some aspects of the legal system in India continued to be archaic. For example, the labour laws until the enacted of consolidating codes found their origin in the British laws of the early 20th century and have since undergone only minor amendments, even though the same laws in Britain have changed significantly.
"As a result, sectors such as manufacturing have been dogged by strikes and lock-outs. Additionally, it is very difficult to terminate the services of blue-collared employees in India due to extensive protections under various laws. India's import policies, despite the recent relaxations, continue to remain unfriendly with very high import duties charged on many imported goods. India's tax and corporate laws are complex," the report said.
Nisha Biswal President of the US-India Business Council and Senior Vice President for South Asia at the US Chamber of Commerce said that as leaders around the globe reassess their approach to global trade and investment and recover from disrupted supply chains, both nations have the capacity to catalyse areas of growth to achieve the shared goal of $500 billion in two-way trade.
This will require a strategic look at market-based reforms, deeper cooperation in research and development and a dynamic assessment of key sectors that need a targeted boost within the bilateral economic relationship, she added.
"I congratulate Nishith Desai Associates and Sannam S4 for taking the initiative to author the 'Doing Business in India' report. Investment guides like the 'Doing Business in India' are excellent resources for businesses that are evaluating India as a viable option and are critical towards the achievement of the $500 billion goal in two-way trade," she said.