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Big business demands more as India defends pace of change
[GANDHINAGAR, India] India must tackle its crumbling infrastructure, stifling red tape and lay out clear policies if it is to attract the billions of dollars of outside investment it sorely needs, foreign bosses said on the fringes of a high-profile summit.
The so-called "Davos of the East", a gathering of hundreds of politicians and businessmen in Prime Minister Narendra Modi's home state of Gujarat, seeks to pitch India as a major investment destination at a time of lacklustre global markets.
Part of a major public relations drive, the three-day event has seen praised heaped on Modi, and little public criticism.
But on the sidelines, invited by top Indian officials to lay out their concerns, executives pressed for substantial reform.
One Canadian chief executive described a "fireside chat"with Finance Minister Arun Jaitley, who took questions from potential investors at a dinner hosted by Modi on Sunday night.
"A majority of the CEOs ... said we want to do business in India but are hesitant to enter the Indian markets till the government tackles the problem of crumbling infrastructure," the CEO said, speaking on condition of anonymity.
Mr Jaitley responded publicly on Monday, defending the pace of change under the Modi government formed last May and saying that the economy would pick up.
"With all the steps we've taken, we do expect that in the months to come the economy will move much faster," he said.
But business leaders from outside India demanded more from a government that has already sought to fast-track change in areas such as coal and land purchases - a hint of the challenges ahead.
By the government's own reckoning, India needs US$800 billion a year in investments to accelerate economic growth to 7 per cent from closer to 5 per cent.
"We understand that there is business to be done and money can be made in India, but the process of achieving this goal requires government support," said the head of a US-based pharmaceutical company who requested anonymity.
"I don't mean investor summits like these. One requires a clean defined policy framework and crystal clear procedure: India cannot camouflage its inherent weaknesses."
Market access and patent protection for US drugs are expected to feature when Modi hosts President Barack Obama later this month for India's annual Republic Day celebrations.
Mr Modi won election by a landslide on hopes he would revive a languishing economy. But with growth still sputtering, investors are asking how much substance there is behind his promise of an economic "quantum leap".
The government recognises Indians are "getting impatient", Jaitley said on Sunday, but he said it was also accused of moving too fast - a reference to the use of executive orders, or ordinances.
"(We) intended to convey a message to every Indian and the investors all over the world that even if one house of parliament takes some time to settle down and start functioning, India cannot stop functioning in the meanwhile," he said.
The government's executive orders will need to be ratified within six weeks of parliament reconvening.
Mr Jaitley promised the rollout of other changes, including the introduction of a nationwide sales tax in the next year or so.
Investors and manufacturers see the goods and services tax (GST) as a game-changer that would make it easier to do business while broadening the tax base. Many believe GST could add as much as 2 percentage points to India's economy.
"The summit is a great marketing pitch, but business depends on real time transactions," said the chief executive of an Indian mining firm who also declined to be named. "If the government wants Indian and international companies to invest, they will have to implement all the policy changes at the earliest."