Australian companies have put on hold their investment plans for the country in view of what they term as failure of the Manmohan Singh Government to push ahead with second-generation reforms, tackle corruption issues head-on and put an end to policy paralysis in the government.
“We see great opportunity in various sectors in India. But the government seems to have come to a standstill and no decisions are being taken. Retrograde steps on taxation matters have been initiated and there is no sign of second-generation reforms taking off. There is a total lack of direction and policy or decision-making has come to a standstill. Corruption has become a major concern with no action still taken against those involved in the Commonwealth Games scam. This should be a cause of worry for the Indian Government and not the investors,'' senior officials in the Foreign Affairs and Trade Department told this visiting correspondent.
The most shocking, they said, was the decision to allow 51 per cent in multi-brand retail and then take it back. It sent a wrong message to foreign investors over the credibility and stability of UPA Government's policies. The Tata group and Woolworths of Australia have a tie-up in the retail sector but the relationship has not taken off in a big manner due to lack of policy direction from New Delhi, a Australian company CEO said here on condition of anonymity.
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They said Australian companies were looking forward to opening up of the banking sector with major reforms, sorting out the taxation issues pertaining to wine and spirits, clearances for mining ventures, issues concerning government procurement policy and opening up of the retail sector in the multi-brand area.
“We will be taking up these issues when the next round of Free Trade Agreement (FTA) negotiations are scheduled to be held in Australia on May 24 and 25. We want to expand the basket of exports to India also as 80 per cent of exports today are accounted for by gold, coal, copper, iron ore and education exchanges,” he added.
Rio Tinto is already operating in India in Odisha and Madhya Pradesh. A number of other Australian companies want to enter India but are deterred by the lack of policy directions. They cite the example of oil and gas blocks, some of which belong to Australian companies, which have been hanging fire for lack of proper clearances for almost seven to eight years despite intervention by the Prime Minister's Office (PMO).
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This will be the third round of negotiations between India and Australia since the FTA negotiations were launched in May last year in Canberra.
India and Australia are looking at a comprehensive agreement that includes trade and goods and services and removes barriers of free trade.