Investors see India as a difficult place to do business: Darius Pandole

Darius Pandole, Partner, New Silk Route Advisors tells Business Today's Sarika Malhotra that limited clarity on policy and regulation in India has forced investors to re-examine their investment thesis.

Q. How do you view the current business and investment climate in India?
 
A. The business sentiment in India has remained weak as the performance of the Union Government, from a business perspective, has been below expectations due to a host of factors.
 
High cost of borrowing is having a negative impact on demand and increased levels of stressed assets, which is further affecting new investments and overall growth. Limited clarity on government policies and regulations have forced investors to re-examine their investment thesis, accept increased uncertainty and perhaps lower returns. Proposals like retrospective taxation of offshore transactions have sent wrong signals to investors and increased uncertainty for future viable investments. Thus investors, both foreign and Indian, have increased their risk perception and view India as a difficult place to do business.
 
Q. What will be an ideal budget, which you think will be deliverable for the new government?

A. An ideal budget from the new government will have to balance the twin critical imperatives of encouraging domestic demand and stimulating growth, whilst keeping the fiscal deficit and inflation under control. A prerequisite for domestic growth is encouraging investments into Indian infrastructure, including health care and education. This would require increasing the availability and reducing the cost of long-term funding through dedicated infrastructure debt funds, fiscal incentives, and encouraging PPP models to improve on-ground project execution. Improved infrastructure would lower the cost of doing business in India, and provide multiplier benefits for the economy. The new government would need to define a stable tax and regulatory environment, and simplify legal, administrative and bureaucratic procedures to improve the investment climate.