The Narendra Modi government may be talking of economic reforms, but the confidence of global investors in the Indian economy still seems jittery. Honda’s global chairman Fumihiko Ike has said that doing business in India remains difficult and processes in the country are “complicated” and “burdensome”.
Ike, who also heads the crucial Japanese Automobile Manufacturers Association (JAMA), said the new government should take steps to improve the investment in the country as poor infrastructure and uncertain tax regime makes it tough to do business in India.
Ike’s statement comes a day after British telecom giant Vodafone echoed similar sentiments and European oil major BP also expressed “frustration” over the delay in gas price hike, which was delaying the proposed investment by the company. Vodafone, which battles a Rs 20,000 crore claim by the government over a capital gains tax issue, said foreign companies find it “difficult” to do business in India because of slower government clearances.
Speaking at the 54th annual convention of Society of Indian Automobile Manufacturers ( Siam) here, Ike said the Indian government needs to take steps to make the country an attractive destination for foreign investors and “improve the business environment for investments”.
Ike said component suppliers to automakers “encounter problems” in getting business permits and having their paperwork done and many of the processes related to the setting up of factories are “complicated” and thus require simplification.
Ike made a special mention of the tax regime in India which he said was “burdensome” when compared to other countries. This, he said, was “impeding investments” in India.
The Honda chief sought an early rollout of a single goods and services tax. “India has a complex domestic tax system. We want a single tax system.”
However, while highlighting the problems being faced by foreign investors, Ike had a special mention for Prime Minister Narendra Modi who promised the ease of investments in India during his recent trip to Japan.
Ike said the Japanese investors were enthused by Modi’s call to increase investments in India. “He has promised that red tape will be replaced by red carpet. This makes us optimistic on making investments.”
BP Plc, whose $7.2 billion investment in 2011 was the largest foreign investment in the energy sector in India, said on Thursday that the delay in implementation of a natural gas price hike was frustrating.
“We are ready to go ahead with our first project which is probably a $4 billion project. We are getting ready to potentially move that forward (but) are waiting for the gas price decision. So, is that frustration, yes because it was decided last June 2013,” said Sashi Mukundan, regional president and head of country (India), BP Group.