This is a blog created specially for the readers of the book Indian Economy Key Concepts. This is mostly to provide Indian Economy related news that is published in various newspapers under one umbrella. My own write ups will be posted very rarely.
Factors decreasing competitiveness include slow roll out of reforms including GST, import restrictions and restrictive labour laws
India’s investment climate has worsened compared with last year and corruption is one of the main deterrents for doing business, a survey of 141 Swedish companies based in the country revealed.
“One out of three companies state that ‘not paying bribes’ is a competitive disadvantage,” according to the 8th annual Business Climate Survey conducted by the Swedish Chamber of Commerce in India.
A slow roll out of reforms including the Goods and Services Tax, import restrictions, high customs duties and red-tape at the lower levels of bureaucracy and restrictive labour laws, were the other main hurdles.
On the business outlook, the survey said 52 per cent of the companies consider the current business climate to be ‘very favourable' (lower than the last year’s 60 per cent), while 76 per cent view it as 'favourable' (lower than 80 per cent last year).
Despite a dampening of the sentiment, companies will continue to invest, according to the survey.
Eight out of 10 companies, the same as last year, are looking to increase their investments in the coming three years.
High inflation, increased labour costs, delay in receiving payments, and long and complex sales processes are among the main factors impacting cost-advantage negatively.
Swedish companies wanted an early conclusion of the India-European Union free trade agreement (FTA) negotiations, saying the pact was crucial for boosting Swedish investments to India. Prime Minister Narendra Modi, official sources said, could travel to Brussels next month for the India-EU Summit that could see a resumption of the FTA talks.
“Sweden would like the FTA negotiations to be concluded as soon as possible. A lot of work has been done on the FTA.
Though the devil is in the details, it should not take much time to reach a consensus,” Harald Sandberg, Ambassador of Sweden to India, said.
A successful conclusion of the FTA was important to widen trade ties between Sweden and India.
India, during the FTA negotiations, demanded greater market access to the services sector in the EU, including easier temporary movement of Indian skilled professionals to the EU.
Sweden has one of the most liberal policies on temporary movement of natural persons and on migration as it believes that such movement will result in a healthy exchange of knowledge, Sandberg said after releasing the findings of the survey.
Amitabh Kant, secretary, Department of Industrial Policy and Promotion, said the challenge for India was to grow at 9-10 per cent annually for three decades or more to lift millions out of poverty.
Swedish companies must “invest in India ahead of the curve” to reap the benefits of the initiatives undertaken by the government including the Make in India, Skill India, Start-up Mission, the Smart City policy and easing of foreign investment norms in sectors such as defence, railways, construction, insurance and medical devices.