India must speed up economic reforms if it wants more investment by foreign companies, German industry bosses visiting New Delhi said at a gathering of business leaders Monday.
The business delegation accompanying German Chancellor Angela Merkel on her visit to India includes the heads of Deutsche Bank, Bombardier Transportation, Siemens, Airbus Group, engineering company Voith, technologies firm ABB and software firm SAP.
Despite commitments by Prime Minister Narendra Modi’s government and its ambitious Make-in-India programme, many hurdles of doing business in India remained, bosses at the gathering said, citing red tape, infrastructure bottlenecks, and opaque tax regimes.
Modi’s Bharatiya Janata Party government came to power in May 2014 on the promise of boosting a flagging economy and has been aggressively inviting foreign investment.
The Indian government was pushing for predictability, clarity and accountability, Amitabh Kant, secretary of the Department of Industrial Polcy and Promotion, said at the meeting.
“We will rigorously enforce every programme … India is a different country now,” Kant said inviting German companies to act as facilitator and catalyst for India’s economic development.
Germany has almost 1,700 companies either operating or collaborating in India but the German executives did not seem convinced that things had changed.
“We welcome the easing of some rules on foreign direct investment, but it has never been easy to do business in India and a lot is still left to be done,” Airbus chief executive Thomas Enders said.
Enders brought up the procurement process especially in the area of defence and said the Indian government would often change its stance half-way through a process.
“It costs us a lot of money … such arbitrariness in the process does not help us,” Enders said.
The other issues highlighted included the need to adhere to international rules and the lack of standards on intellectual property rights, in particular in the pharmaceutical industry.
“We want to support the Make-in-India programme but it has to be made possible,” Walter Schlebusch, chief executive of Giesecke and Devrient GmbH said.
Eight deals were signed during the summit among them one on fast track clearance of projects by India.
German Foreign Minister Frank-Walter Steinmeier sent a similar message to Indian businessmen in a separate newspaper interview.
“A survey conducted by the Indo-German Chamber of Commerce has shown that German companies hold a positive long-term view of the Indian market,” Steinemeier was quoted as saying in the Hindustan Times.
“At the same time they see areas of concern regarding the ease of doing business … too much red tape, infrastructure hurdles, corruption, lack of skilled labour, tax disputes.”
Land acquisition problems as well as tax and customs issues needed to be resolved to encourage further investment, Steinmeier said. “The introduction of a countrywide Goods and Services Tax would be a big step forward.”
Merkel and Modi are scheduled to attend a meeting with business leaders in information technology hub Bangalore on Tuesday.
Germany is India’s largest trading partner in the European Union and the seventh largest foreign investor in India.
German foreign direct investment in India from 1991 through February 2015, was valued at 8.25 billion dollars.