Prime Minister Narendra Modi unveiled his "Make In India" plan just two days before embarking upon his first US visit on Friday, clearly pointing at what his plans are to entice the foreign investors to enter India in a big way, especially into the areas of manufacturing and knowledge-based IT sector.
Modi’s speeches in Japan and his emphasis on business areas during the Chinese President’s visit underscore the importance he is attaching to attract FDI pledges in India, which have already crossed $55 billion. His next sojourn in New York and Washington DC will see him in close confabulations with 17 top US corporate chiefs including Google, IBM, GE, Goldman Sachs and Boeing.
One example often cited by the American businessmen while investing in India is the World Bank’s annual report on Doing Business and India ranks 134 out of 189 countries in terms of the ease of doing business, which is far lower and uninspiring, mainly due to a banana republic attitude still hovering the power corridors, reminiscent of feudal days of the 18th century, certainly not belonging to the modern day business practices.
The poor interface with the government, 65% arbitrary and indirect taxation, pertinent permit Raj that is pervading the daily lifestyle, social inequalities especially anti-women attitude and above all, the "Chalta Hai" attitude that is inalienable to India come to anybody’s mind before assuring any visiting Indian dignitary about major future investments.
Unfortunately, Modi’s government has failed to allay the fears of foreign investors despite crossing the first three months in office few days ago. Taxation, especially retrospective taxation as seen in the case of Vodafone and Nokia cannot make India an attractive destination for liberal FDI despite government assurances.
Modi’s government should have said "NO" to this policy and that too loudly to the entire world reiterating that it does not believe in "tax terrorism", which is seen as protectionist policy. Instead of scrapping the controversial amendment in Budget, Modi government has merely assured investors that the law would not be used to create new liabilities.
Even on another controversial issue such as the general anti-avoidance rules (GAAR) to tighten rules of investments coming from nations which have double taxation avoidance treaties with India.
In addition, India is still one of the most corrupt nation and its cumbersome red tape process cannot alter the nation’s image overnight to help Modi attract major investors from the US, though most of the 17 CEOs he is meeting already have their businesses set up in India.
The only hope for Modi is to convince his American friends about India’s successful Mangalyaan mission and explore more space-based projects with ISRO’s talent showcased properly.