India Investment: A bright destination but dark journey
It is said that the question faced in the current business and economic scenario in India is not as to whether India can fly or not but the real challenge is how high can it fly. Time and again credible foreign investors including MNCs have aired their concerns about the FDI path in India. They have said that despite huge potential available in India in almost all sectors of commerce and industry, the journey of doing business is far from pleasant. Predominantly the factors that act as deterrents or road blockers are – plethora or overabundance of ambiguously ludicrous legislation including subordinate legislation in the form of policies and directives; and obstinate governance. No matter how interesting a destination is, if the journey is too bumpy and dreadful, many a times traveller abandons the trip itself. That is the tragedy, which is evolving for destination India.
India being a fast developing nation and largest democracy in the world is stuck between ideology crises. On one hand it wants to become a globally acclaimed economic power and on other hand it is entangled in populist polity. In order to play to the gallery of more than half a billion voters, the political parties in power are trying hard to play role of an efficient tightrope walker. But this conflict of tug of war between globalization and domestic polity has stifled the pace of economic change, which is sought to be brought about by the Indian economic and industrial policy makers.
Undoubtedly, the laws and policies of each nation are quite unique and different to that of others because these are based on the specific needs of their population. Having laws not conducive to the aspirations of the people would lead to the frequent disobedience, breach or circumvention of the incompatible laws. In any civilized and developed society, the ethical values and social mannerism of its people is reflected in the applicable laws and legal system. Greater the respect for civility and lesser would be the need for laws, regulations and legal system. A good and fair economic policy has dual objective attainment of social needs and economic development at the same time through the instrumentality of law. However, the only exception to that rule being the effect of international treaties. Where India is signatory to any international treaty, which requires making of laws for giving them legal sanction, those laws will have to be legislated notwithstanding the extent of the will of the people. Consequently, one has to appreciate the ideology of globalization in the current scenario of multilateralism. There can be local and domestic laws based on the need of the populous and national laws having global significance and impact. Trade and Investment laws or in other words Economic Policy of the nation has to be in conformity with the policy of the developed world or policy, which is generally acceptable in the international business market. Rules of business like rules of any sports should be uniform and universal all across the globe.
India should work towards the agenda of creation of wealth and not re-distribution of wealth, as is being propagated by some Indian political scientists. As the former initiative would not only unleash individual and collective energies and remove any restrictive barrier that may arise in the process of growth but will promote the regime of fewer laws. Law can be good or bad driver of nation’s Economy. A prosperous society may be more concerned about piracy of the intellectual wealth. It may also show greater concern about environmental pollutions that affect the quality of life or about adherence to the highest standards of competence, which a professional is expected to observe. Laws and legal systems, in this manner, codify social values, attitudes and expectations of behavior from members of the society.
To sum-up my thoughts, I would say that India does need to address the following issues in order to ensure that it makes the journey of investors to India destination smooth and seamless –
- Strictly introduce and adhere to single window clearance mechanism for all regulatory compliances.
- Strictly introduce and adhere to e-governance & clearance mechanism for all regulatory & declaratory compliances.
- Strictly introduce the mechanism of self-regulation by the investors with stringent penalties for default.
- Strictly introduce practice of formulation of trade & investment policies, which meet the purpose of economic efficiency.
- Strictly introduce the practice of orientation of the interested and affected parties as to effect and impact of any economic policy measure before its implementation.
- Strictly introduce the time-bound mechanism for judicial or administrative resolution, as the case may be, of business and investment disputes.
*Author Hemant Batra is Founder of Kaden Boriss Legal; he is Secretary General of Saarclaw and adviser to several global institutions including UNDP, UNAIDS and ADB; he is also special guest lecturer/speaker at several prestigious international intellectual institutions including National Law Schools at Hyderabad and Delhi, Indian School of Business, Fore School of Management, APEA, ME and ABF.
New Delhi, India