? They may have lost interest in India?
The situation is grim.
? They (foreign companies) may be losing interest in India? On August 12, India's Business Standard quoted government data to reach this conclusion. At the end of last year, Indian Minister of Commerce and Industry Gauillard said that from 20 14 to 202 1 year, * * * 2,783 multinational companies closed their subsidiaries or offices in India. Considering that only about 65438+2000 are still operating in India? Active? Foreign companies, this number is not small.
Manmohan Singh, Indian Minister of State for Enterprise Affairs, recently said that as of July 27th, 2022, there were 1777 multinational companies registered in India? Gone? And there are only 5068 multinational companies registered in India. The annual report of the Indian government also shows that the situation is very serious. The report shows that the number of multinational companies registered in India decreased from 265,438+06 in fiscal year 2065,438+04 to 63 in fiscal year 2026,5438+06. Active? The proportion of foreign enterprises in all registered foreign enterprises decreased from 80% in fiscal year 20 14 to 66% in fiscal year 20021.
Although technology companies represented by Google, capital companies represented by Blackstone, and aircraft manufacturers represented by Boeing and Airbus have increased their investment layout in India since the outbreak of the new crown pneumonia epidemic, many multinational companies including Swiss building materials company Haorui and Royal Bank of Scotland have announced their withdrawal from the Indian market. Many of them are already in India? Deep ploughing? For example, for many years, the German retailer Metro intended to sell its business in India for about 20 years for about 654.38+750 million dollars. Ford, an American automobile manufacturer, has been working since the 1990s? Strategy? Indian market. In May this year, Ford announced that it would abandon the production and export of electric vehicles in India. Last September, the company decided to stop producing traditional cars in India.
Taxes discourage foreign companies.
It stands to reason that India, with a population of 65.438+0.38 billion, is one of the countries with the fastest economic growth in the world, and should have been the target of multinational companies? Xiang Bo? But why do so many multinational companies decide to give up the Indian market? India's Deccan Herald and many other media have analyzed this situation, and think that two factors have caused the above situation: one is the multinational company's own reasons, including the failure to open the price-sensitive Indian market and the adjustment of global development strategy; Second, India's business environment is not conducive to multinational enterprises, including high tariff barriers. The investment environment report released by the State Council 202 1 describes India as? A challenging place to do business? . According to the Economic Freedom Index released by the American Heritage Foundation this year, India ranks 27th among 39 countries and regions in the Asia-Pacific region, with a total score lower than the world average.
? India may be the country with the highest tariff in the world. Former US President Trump has expressed dissatisfaction. Modi reformed India's tax law after he came to power in 20 14, but at the end of 20 18, he began to raise tariffs on a large scale, from an average of 13% to 20%. When Trump visited India two years ago, he regretted that American motorcycle manufacturer Harley-Davidson had to pay high import tariffs in India. Harley-Davidson has decided to leave the Indian market, and Tesla, which discussed tariffs with India for one year, also said in May that it would shelve its plan to sell electric vehicles in India. Tesla wants to be in India first? Test the water? Sales of electric vehicles produced in other countries, and the Indian government wants Tesla to produce electric vehicles in India before giving the company tax incentives.
Tax disputes are also one of the important reasons why many multinational companies are deterred from India. In addition to China companies such as Xiaomi, Indian tax authorities also conducted tax investigations on many foreign companies such as Nokia, IBM, Wal-Mart and Kane Energy, and imposed high fines. Liu Ling, a senior director who once worked in the Indian branch of the four major accounting firms, told the Global Times reporter that it is common for Indian tax authorities to check the taxes of various companies, but if they carefully observe and analyze, they will find that they have certain preferences, such as checking multinational companies and being strict with small enterprises; When the economic situation is good, there will be fewer surveys, and when the economic situation is bad, there will be more surveys.
According to The Hill and other media reports, French Pernod Ricard announced in last month that it would suspend its new investment in India due to tax disputes. Since 2007, British Vodafone and Indian government have been fighting over levied retroactively for more than ten years. In 20 12, India's Supreme Court ruled that Vodafone won the case, but the then ruling National Congress was dissatisfied with it, so the Indian Parliament passed legislation to bypass the Supreme Court's ruling and allow the tax authorities to continue to pay taxes to Vodafone? Want money? . At that time, the Bharatiya Janata Party, which was the opposition party, called this practice of the Congress Party? Tax terrorism? However, after the Indian Party came to power, it continued to invoke this law against foreign-funded enterprises? Claiming debts? . Modi government abolished this law in 20021,but the dispute between India and several multinational companies did not end before.
? Managing cholesterol? Hinder business development
The management of the Indian government has also caused great headaches for multinational companies. Some Indian business people said that the federal and local governments have formulated various laws, regulations and rules, and these complicated regulations have become? Managing cholesterol? , affecting the development of Indian commerce. Agawala, a partner of Nanjiya-Anderson, an Indian business consulting firm, told Deccan Herald that the Indian government has been carrying out management reforms to improve the business environment. However, these reforms have not only failed to meet the standards, but also the ever-changing laws and regulations have brought uncertainty and trouble to enterprises. Some people think that the Indian government approved an incentive plan worth $654.38+0 billion last year to establish a chip industry base in China, but the global chip giants did not give it to India. Passion? Get up. Government management may be an important reason for this phenomenon.
In addition, the legal procedures for doing business in India are extremely complicated. According to the Asia Times, data from the World Bank show that it takes 18 days to register a company in India, which is about a week longer than the average time in OECD countries. In addition, enterprises registered in India must go through the 12 step. Applying for a building permit takes 34 steps, 1 10 days, and must be approved by the central government of India and the state governments. It is not easy to meet the hydropower conditions of production. For example, it takes about 8 days to 3 weeks to connect electricity in India.
Land is a difficult problem.
How to acquire land has also become a difficult problem for multinational companies to develop in India. According to India's the print News Network, the country's land law failed to balance the interests of landowners and India's development needs, which hit the investment enthusiasm of foreign companies. With India's first high-speed rail? Take Mumbai-Ahmedabad high-speed railway as an example. The railway is 508 kilometers long, of which about 100 kilometers is located in Maharashtra, where Mumbai is located. In 20 15, Japan was approved to build this railway, and the project started in 20 17. Japanese media recently said that at present, the railway has only been built about 10 km, and the lack of land is the main reason for the delay of the project. According to the report, as of September 20021year, Maharashtra only expropriated 30% of the project land.
The Indian Print News Network compares the output of Tesla Giga Shanghai and Suzuki in Gujarat. According to the report, Tesla reached an agreement with the Shanghai Municipal Government to deliver the first car to customers only 537 days apart. The factory of Maruti Suzuki India Company (parent company is Suzuki Company of Japan) took nearly five years from reaching an agreement with the local government to putting it into production. The main reason for this phenomenon is the difficulty in obtaining land caused by the speculative rise of local land prices.
In addition to the above problems, the Indian government's protection policy for domestic enterprises has also become a factor limiting foreign investment. In addition, the report of the Indian Observer Research Foundation shows that there are a large number of provisions in Indian business laws involving imprisonment of criminals, highlighting the risks faced by entrepreneurs in doing business in India.
What does it mean to distribute rice to 800 million people?
India has always wanted to be the new one? World factory? And launched on 20 14? Made in India? Plan. To achieve this goal, New Delhi has been trying to attract multinational companies to transfer their production bases from China to India in recent years. The United States has always hoped that the Indian rise will contain China. However, the reality has disappointed the United States and other western countries.
The Hill recently issued a document calling on Biden's government to pay attention to the phenomenon that many multinational companies leave India. The West believes that only by achieving higher economic growth can New Delhi tap its economic and military potential and curb the development of China, which can only be achieved when more foreign investment flows into India and the Indian market is further opened. Although India's economy is expected to grow by 8% in 2022 and 6.9% in 2023, it is lower than 12.5% and 8.5% originally predicted by the International Monetary Fund. In addition, India's growth is attributed to its huge consumer market, rather than the increase of foreign direct investment (FDI). From 20 19 to 202 1, the proportion of global FDI in India decreased from 3.4% to 2.8%, while the proportion of China in global FDI increased from 14.5% to 20.3%.
20 14 Modi said after taking office that he would take many measures to create a good business environment and strive to upgrade India's ranking to the top 50 in the global business environment report released by the World Bank in 20 17. Although this goal has not been achieved by 20021India, in last year's global business environment report, India ranked 63rd, which is one of the countries with rapid growth in recent years. However? Made in India? India's manufacturing industry has not been greatly improved as planned.
According to the Indian edition of Fortune magazine, New Delhi plans to increase the proportion of manufacturing in GDP to 25%. However, official statistics show that this has not happened. The proportion of manufacturing industry in India's total value added (GVA) decreased from 65,438+08.4% in fiscal year 2065,438+08 to 65,438+07.8% in fiscal year 2026,5438+0. In FY 2022, this figure is expected to rise to 18.2%, still below 25%.
In addition, Deccan Herald recently reported that the Standing Committee of Indian Parliament pointed out in the report "Attracting Investment in Post-COVID-19 Economy: Challenges and Opportunities for India" that during the COVID-19 outbreak, most foreign enterprises moved their production bases to countries and regions outside China, such as Vietnam and Thailand, and only a few enterprises came to India. The Indian edition of Fortune magazine reminded that the above data were not provided by the Indian government to the National Assembly, but were summarized by the Indian Parliament according to media reports. This shows that the Indian government has not tracked the movements of relevant enterprises.
On August 9th, the website of National Interest magazine in the United States published a document saying that the quality of Indian labor force and the level of infrastructure are far behind that of China. In addition, India's social division and prevailing trade protectionism make it unable to replace China's position in manufacturing. In an interview with India's Economic Times, Modi said that after the outbreak of the epidemic, the Indian government made progress in distributing rice to 800 million Indians during the blockade? Great success? . The Asia Times pointed out that the figures mentioned by Modi are crucial for foreign companies wishing to enter India. Of India's population of 654.38+38 billion, 800 million are poor, low-income or middle-low-income people, who receive government food subsidies. These people will not become consumers of expensive goods and services of western companies. Foreign companies will not enter a country with a large population. People need to have enough purchasing power to consume their products. In contrast, China is both a big producer and a big consumer. There are about 800 million middle-and high-income people in China. It is estimated that Indian purchasing power is only 20% of that of China.
"Capitol Hill" believes that the hope of the West for India to become a modern and prosperous country has not been realized at the speed predicted by some people in the early years of the 2/kloc-0 century. India is not enough to be China at present? Opponents? . However, despite various challenges, India's market size and geographical location will still make it popular with some foreign companies? Hot land? . (Special correspondent of Global Times in India Xu Fu Global Times reporter Fan Wei Yuan Jirong Global Times special correspondent Ren Xiaoming)