Business Prospects in India
Business is that giant who resides in the whole world. Until one doesn’t connect globally one can’t come under its clutches thereby missing all the benefits it has to offer. It wasn’t until the early 1990s that India began to reap these benefits with the corroding ‘license raj’ giving way to the economic reform of Liberalization, Privatization and Globalization (LPG). Economic indicators like foreign exchange reserves, that can cover upto 6 months imports now as compared to those that could cover only 2 weeks imports then, substantiate the ameliorated scenario. On the flipside, indicators such as the current account deficit, which is worse (4%) now as compared to that in 1991 (3%), impugn India’s amiability towards businesses.
India being rich and diverse in its culture and demography, exhibits a plethora of business avenues. With a population of over 1 billion, a growing middle and upper middle class that aspires for a better standard of living, the market for ventures in retail, education, wealth management, health, telecom, infrastructure development, and insurance sectors is massive. The relatively lower labour costs and a large rural population (83 million) are instrumental in attracting labour intensive IT and social enterprises respectively. In addition, there is a growing pool of consumers demanding customised and ‘indianised’ products and services and opportunities for recreation and self-improvement, which has opened doors for many innovative entrepreneurs. Even sectors like tourism that remained untapped previously, are witnessing more takers now.
However, doing business in India has its share of challenges. Firstly, the complex demographics make it imperative to identify and understand the target group, which is a herculean task in itself. Next, the deficit and delay in implementing economic reform policies like standardised and unified tax codes (Goods and Service Tax, Direct Tax Code), present a major gridlock to businesses. The political volatility arising from fractional and coalition politics exacerbates distrust of investors in India where economics and politics are joined at the hip. Apart from these issues, the extant corruption, an inefficient judicial system, lack of leadership, excessive regulation in some sectors, further impair the prospects of doing business in India. The ebbing growth projections (from 9% to 6%), credit rating agency Moody’s downgrade of top lenders in India (from C- to D+) are unfortunate outcomes of these hurdles.
Perhaps, the acumen of our forefathers who delivered an impressive Indian constitution from scratch in 1950 can serve as a guiding light in the current state of affairs that desperately need to be sorted out. Changes in the political system, where the vote of the common man has more weight in determining the top level policy and decision makers, will contribute significantly in raising India from a flawed democracy to a full democracy like Sweden or Australia, by taking off the burden of filling their ‘vote banks’ from politicians. Stronger and independent trade and corruption regulatory bodies like Hong Kong’s Independent Commission against Corruption are another need of the hour. Indigenous measures that utilize and unify India’s greatest strength, its people, to surpass the various other aforementioned hurdles if executed effectively will determine if a game-changer like the LPG reforms can happen again if businesses have to completely thrive and prosper in India.