Government Needs to go Beyond Cutting Red Tape to Handholding Investing Companies

The world has seen 30-year miracles – the way Japan, then ASEAN nations, recently China and now how India is developing exponentially. Each country, Note – EACH COUNTRY which developed its Manufacturing and Exports, did it on the back of a single GST (Goods and Services Tax). Take the example of China – It levies only 2 taxes viz VAT and Income Tax! In that also, paying VAT is a must, but the Chinese Government has a relaxed approach with regards to Income tax. Contrast with India where the entrepreneur has to devote huge time and effort just to meet its regulatory obligations.

The very existence of business is based on barriers to entry which they possess or create. For example, having a License or rights over some mineral in India always meant a robust business case. But with auctions being in vogue, one needs to have de facto deep pockets to begin with. US policies are more benign in many cases – case in point - It costs nothing to procure a Telecom License in the US, but its very continuity is conditional on timely execution and implementation of the business, else there are stiff penalties.

US, Europe, China and ASEAN nations provide easy access to Land, electricity, water, power and other such variables which are required with minimum effort and on time. Public services abroad, are devoid of corruption. India is a more difficult case with rickety infrastructure and hurdles in procurement – example being huge logistics costs and hence extra turnaround timing (TAT) at Indian roads, ports and airports.

Governments like that of China, went ahead of just an easy regulatory regime – Businesses tell stories of how if one wanted to invest in China, the Government official acted as a marketer, advisor and a consultant and ensured all hurdles for the company for sorted out without a fuss. For huge companies like GE, the Chinese ensured a plethora of business opportunities, albeit in ways which would benefit China. GE gladly shared its technological expertise and set up factories in China, knowing that’s where it would get business from.

Modi Government is indeed attempting to do a similar thing in India – the PMO (Prime Minister’s Office) has a devoted section for investors and businesses from Japan and other such countries, from where the Government has evinced and expects huge investment. Single window clearances apart, Government now needs to move a step ahead by having a Relationship Manager for these companies, who not only ensured all clearances are provided but ensure availability of land, water and power promptly. After all, today we are competing with other countries for investment, not only within our own.