Prime Minister Narendra Modi vowed to banish India’s reputation as a tough place to do business Monday, promising a competitive tax regime and an end to excessive red tape in a pitch to US executives delivered alongside Barack Obama.
As the US president said there were still “too many obstacles” for businesses wanting to break into the vast Indian market, Modi admitted that unpredictable tax rules had scared off investors in the past.
The right-wing prime minister, who came to power last May after pledging to transform the Indian economy, also promised to address concerns about intellectual property that have long irked potential investors. “You will find an environment that is not only open, but also welcoming,” he said in the address to Indian and US executives, such as PepsiCo. chairman Indra Nooyi and MasterCard President Ajay Banga.
“We will guide you and walk with you in your projects. “You will find a climate that encourages investment and rewards enterprise. It will nurture innovation and protect your intellectual property. “It will make it easy to do business.”
Under the previous left-leaning Congress government, investors frequently complained about a hostile business climate in India, frustrated by bureaucracy and corruption.
India slipped two places down the World Bank’s ease of doing business rankings last year to 142 out of 189 countries.
Without setting a timeline, Modi promised that he would make India one of the top 50 most attractive places to do business. Under Congress, many foreign businesses also complained about an aggressive and arbitrary taxation regime.
British mobile giant Vodafone is currently embroiled in a bitter, $2.4-billion battle with India’s tax authorities, while Finnish company Nokia had a plant in India seized over a tax dispute.
Vodafone is battling the demand for back taxes over its $10.7-billion purchase of Indian mobile operations in 2007 from Hong Kong-based Hutchison Whampoa, while India’s tax authorities have also locked horns with Royal Dutch Shell, IBM and other international companies.
In his speech, Modi acknowledged that the tax rules had been too harsh and that he planned to lessen the burden. “We have removed some of the excesses of the past. We will soon address the remaining uncertainties.”
The prime minister’s pledges drew praise from Obama in the middle of his three-day trip to Asia’s third largest economy, which has been struggling through its worst slowdown since the 1980s. But the US president said there should be no illusions about the scale of the task ahead, adding that their economic relationship “is defined by so much untapped potential.”
“We have to keep working to make it easier to do business in both of our countries,” said Obama. “There are still too many barriers, hoops to jump through.
“We hear this consistently from business leaders such as you,” Obama added, speaking alongside Modi. “We have got to do better.”
Before becoming prime minister, Modi spent more than a decade as chief minister of the thriving coastal state of Gujarat which won a reputation under his stewardship as India’s most investor-friendly place.