Browse by year:
December - 2011 - issue > Editor's Desk
Can India make it?
Christo Jacob
Wednesday, November 30, 2011
In a time when several countries are facing the heat of financial meltdown, India is enjoying a strong position, registering high economic growth. As per Morgan Stanley’s anticipation, India has pumped in an investment of $48 billion and is expected to attract as much as $80 billion in next 1-2 years. But strangely enough, India continues to be rated as the toughest and riskiest places to do investments in. The recent turmoil involving the FDI in retail sector is example enough. Of the 46 cities that are in the radar of the retail giants like Walmart, Tesco and Carrefour, only 25 seem to be welcoming them. Confusion persists over the scope of 30 percent sourcing clause in the Indian retail FDI policy, where in foreign retailers do not have to restrict themselves to Indian SMEs to meet the norms. Perhaps this is because the Indian players are anxious that the move will pinch them.

But then it’s tough to change the psyche of an Indian from day one. For instance, if Walmart starts a store next door, most of them are not going to walk in to buy milk or small things. When domestic majors were allowed to invest in retail, we had a similar fear, but both supermarkets and neighborhood stores still continue to co-exist.

This Indian psyche of saying “‘NO’ to everything” itself is a hurdle for growth and does not allow us to catch up with superpowers. For example, in India it takes almost four years to enforce a contract. This when compared to the one year average in OECD (Organisation for Economic Co-operation and Development) countries, gives a clear picture of how difficult the Indian system has made it for the companies to work through them. If someone needs to have an approval on construction permit, the country does not make it any easy for the investors. Instead, you will have a bumpy ride going through about 34 different processes and spend on average 227 days to get it.

The few areas that the country presently tremendously lags are enforcing contracts, dealing with construction permits, starting a business, paying taxes, resolving insolvency, and trading across borders . These issues have to be resolved with war time urgency to put the country back in the fast track of growth.

Please do share your thoughts with us.

Christo Jacob
Managing Editor

Share on LinkedIn