Recently, China enterprises such as vivo and Xiaomi were raided and their bank accounts were frozen. On July 21st, the glory of China mobile phone manufacturers announced because? Well-known reasons? Withdraw from the Indian market. In fact, being taxed by India? Big stick? Not only Chinese companies have been attacked by multinational companies, but also British telecom giant Vodafone, American IBM, French spirits manufacturer Pernod Ricard and many other companies have been attacked by India. Claiming debts? . Multinational companies that announced their departure from India are not only glorious. According to data from the Indian government, in the past seven or eight years, more than 2, multinational companies have suspended their business in India. India has always wanted to be the new one? World factory? However, multinational companies are in succession? Packing? Evacuate the third largest economy in Asia and let Indian Prime Minister Modi? Made in India? The plan is embarrassing.
? They may be losing interest in India?
the situation is very serious
? They (foreign companies) may be losing interest in India? India's "Business Standards" quoted the government data on August 12 to reach this conclusion. At the end of last year, Indian Minister of Commerce and Industry Gauillard said that from 214 to 221, 2,783 multinational companies closed their subsidiaries or offices in India. Considering that there are only about 12 thousand still operating in India? Active? Foreign companies, this number is not small.
Indian Minister of State for Enterprise Affairs Singh said recently that as of July 27th, 222, there were 1,777 multinational companies registered in India? Gone? , and all India * * * only 568 registered multinational companies. The annual report of the Indian government also shows that the situation is very serious. According to the report, the number of multinational companies registered in India has dropped from 216 in fiscal year 214 to 63 in fiscal year 221. Active? The proportion of foreign companies in all registered foreign companies has dropped from 8% in fiscal year 214 to 66% in fiscal year 221.
Although technology companies represented by Google, capital companies represented by Blackstone, and aircraft manufacturers represented by Boeing and Airbus have all increased their investment in India since the outbreak of the COVID-19 epidemic, many multinational companies including Swiss building materials company Haorui and Royal Bank of Scotland have announced that they will withdraw from the Indian market. Many of them are already in India? Deep ploughing? For many years, the German retailer Metro, for example, intends to sell its business in India for about 2 years for about $1.75 billion. Ford, an American automobile manufacturer, has been working since the 199s? Strategy? Indian market. In May this year, Ford announced that it would abandon the production of electric vehicles for export 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 1.38 billion, is one of the countries with the fastest economic growth in the world, which should have been contested by multinational companies? Xiangbo? 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, saying that two factors have caused the above situation: one is the reasons of multinational companies themselves, including the failure to open the price-sensitive Indian market and the adjustment of global development strategies; Second, India's business environment is not conducive to multinational enterprises, including high tariff barriers. The investment environment report released by the State Council in 221 described 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, and its total score is lower than the world average.
? India may be the country with the highest tariff in the world. Former US President Trump once expressed his dissatisfaction. After Modi came to power in 214, he reformed India's tax law, but at the end of 218, he began to raise tariffs on a large scale, from an average of 13% to 2%. 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 has been discussing 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? Selling 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 Chinese companies such as Xiaomi, the Indian tax authorities have conducted tax investigations on many foreign companies such as Nokia, IBM, Wal-Mart and Kane Energy and issued 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 taxes for various companies, but if they carefully observe and analyze, they will find that they have certain preferences, such as checking more multinational companies and being stricter for small enterprises; When the economic situation is good, there will be fewer investigations, and when the economic situation is bad, there will be more investigations.
According to The Hill and other media reports, Pernod Ricard announced in July that it would suspend its new investment in India because of tax disputes. Since 27, Vodafone in Britain and the Indian government have been fighting for more than ten years over the issue of retroactive taxation. In 212, the Supreme Court of India ruled that Vodafone won the case, but the then ruling Congress was dissatisfied with it. The Indian Parliament then passed a legislation to bypass the Supreme Court's ruling and allow the tax authorities to continue to pay Vodafone? Want money? . At that time, the Bharatiya Janata Party, as an 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 to foreign-funded enterprises? Claiming debts? . The Modi government abolished this law in 221, but the previous disputes between India and several multinational companies did not end.
? Managing cholesterol? Hinder business development
The management of the Indian government is also a headache 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 business. Agawala, a partner of Indian business consulting firm Nanjiya-Anderson, told Deccan Herald that in order to improve the business environment, the Indian government has been carrying out management reforms. However, these reforms have not only failed to meet the standards, but also the changing regulations have brought uncertainty and trouble to enterprises. Some people think that the Indian government approved an incentive plan worth $1 billion last year to establish a chip industry base in the country, but the global chip giants did not pay attention 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 12 steps. It takes 34 steps and 11 days to apply for a building permit, which must be approved by the central and state governments of India. 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 the Mumbai-Ahmedabad high-speed railway as an example. This railway is 58 kilometers long, of which about 1 kilometers is located in Maharashtra, where Mumbai is located. In 215, Japan was approved to build this railway and the project started in 217. Japanese media recently said that the railway has only been built for about 1 kilometers, and the lack of land is the main reason for the delay of the project. According to the report, as of September 221, Maharashtra only collected 3% of the project land.
India's the print news network compares the production situation of Tesla's super factory in Shanghai with that of Japanese Suzuki Motor's factory in Gujarat. According to the report, Tesla reached an agreement with the Shanghai municipal government and delivered the first car to customers only 537 days apart. The factory of Maruti Suzuki India Company (parent company is Japanese Suzuki Company) has spent nearly five years from reaching an agreement with the local government to production. The main reason for this phenomenon is the difficulty of land acquisition caused by the speculative rise of local land prices.
in addition to the above problems, the Indian government's protection policies for domestic enterprises have all become factors restricting 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 8 million people?
India has always wanted to be the new one? World factory? And launched in high profile in 214? 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 India will rise to 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 have withdrawn from India. The West believes that only by achieving higher economic growth can New Delhi tap its economic and military potential and curb China's development, 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 222 and 6.9% in 223, it is lower than the initial forecast of 12.5% and 8.5% 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 219 to 221, the proportion of global FDI into India decreased from 3.4% to 2.8%, while China's share of global FDI increased from 14.5% to 2.3%.
After taking office in 214, Modi said that he would take many measures to create a good business environment, and strive to raise India's ranking to the top 5 in the global business environment report released by the World Bank in 217. Although India has not achieved this goal by 221, 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 manufacturing industry's share of GDP to 25%. However, official statistics show that this has not happened. The proportion of India's manufacturing industry in total value added (GVA) decreased from 18.4% in FY 218 to 17.8% in FY 221. In fiscal year 222, 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 the Post-COVID-19 Economy: India's Challenges and Opportunities" 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 Congress, but were summarized by the Indian Parliament according to media reports, which shows that the Indian government has not tracked the movements of related enterprises.
On August 9th, the website of National Interest magazine in the United States published an article 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. Modi said in an interview with India's Economic Times that after the outbreak, during the blockade, the Indian government made progress in distributing rice to 8 million Indians? Unmatched success? . The Asia Times pointed out that the figures mentioned by Modi are crucial for foreign companies wishing to enter India. Of India's 1.38 billion people, 8 million are poor, low-income or low-middle-income people who receive food subsidies from the government. These people will not be consumers of expensive goods and services of western companies. Foreign companies will not enter a country because of its 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 8 million middle-and high-income people in China. It is estimated that Indian purchasing power is only 2% of that of China.
The 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 first few years of the 21st century. India is not enough to be China at present? Rival? . 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 Weiyuan Jirong Global Times special correspondent Ren Xiaoming)