Leading foreign and Indian entrepreneurs gathered at the global investors conferences in Belfast and here strongly feel that the lack of reforms in various sectors, an unstable tax regime and backseat on insurance and pension reforms were pulling down the India growth story and strong measures on these issues need to be taken to restore the confidence of foreign investors.
It was felt that the controversy over the Vodafone issue had scared away the investors who were unsure on how they would be treated by the tax authorities on their investments, especially those pertaining to transfer of share pricing, mergers and acquisitions. The general feeling was that the India story was very much alive but the government of the day needed to take some pro-active steps to bring back foreign investment.
Policy paralysis
Kamil Hasan, General Partner of Granite Hill Capital Partners, based out of California and whose PE has supported investments in India felt that policy paralysis and lack of reforms over the last few years coupled with global economic slowdown had been responsible for the present state of affairs. “Vodafone issue created a very negative perception about India. This along with the scams and corruption and political inaction to address issues head on had created instability. This needs to be addressed as India holds immense opportunities and lot of promise,” he remarked.
Mr. Hasan said one of the major problems faced by investors was lack of exit for them in major infrastructure projects, especially in the IPO market. Similarly, the valuations of Indian companies were also over-valued which was another deterrent for making investments. “We would like to see India and U.S. take steps to sign a double taxation avoidance treaty for attracting major U.S. investments,’’ he added.
Long-term view needed
Lord Karan Bilimoria said foreign investor should take a long-term view of India investments. “Certainly, the Vodafone issue led to a negative perception and scare among investors but I suppose the issue is being addressed now,” he said.
“The Vodafone issue sent wrong signals as overruling the Supreme Court meant that rule of the law did not prevail. India also needs to come clear on conditions for making investments in multi-brand retail. British companies are upbeat but need certain clarifications on some issues as they are too complex. In addition to this, it is important to initiate immediate measures to usher in reforms in the insurance and pension sectors and also enhance foreign direct investment in the defence sector,” he added.
In fact, the concerns of the foreign investors were conveyed to visiting Commerce and Industry Minister Anand Sharma during the business sessions as well as during one-to-one interactions. However, a number of investors were left disappointed as Mr. Sharma had to cut short his visit here and leave for India a day in advance.
