BUSINESS consultant Adrian Mutton says it takes courage for a foreign corporation to make a big-ticket investment in India given the uncertainties thrown up by capricious twists in government policy.
Companies have long griped about India’s byzantine rules and suffocating bureaucracy but recent policy flip-flops have further soured the investor mood.
“You have got to be a pretty brave CEO to gamble on a major investment decision in India especially if you think that decision may be overturned,” says Mutton, who heads India-based Sannam S4, a consultancy which helps firms enter India.
The latest, and for many investors most egregious government measure, was announced in last month’s budget which included provisions allowing India to tax foreign takeovers retroactively to 1962. The plan seeks to override an Indian Supreme Court judgement in January that rejected a $2.2 billion tax bill slapped on British phone giant Vodafone over its 2007 purchase of a local operator.