[Circle depth] Why are more than 2,000 foreign companies "running" in India?

[Global Times special reporter Xu Fu Global Times reporter Fan Weiyuan Jirong Global Times special reporter Ren Xiaoming] Recently, India has conducted raid inspections on Chinese companies such as vivo and Xiaomi for suspected tax evasion and frozen these companies' bank accounts. On July 21, Chinese mobile phone manufacturers Glory announced the withdrawal from the Indian market for "well -known reasons". In fact, multinational companies that have been hit by Indian tax "big sticks" are not only Chinese companies. Many companies such as British Telecom Giants Vodafone, IBM in the United States, and French liquor manufacturer Paullega have been "claimed" by India. The multinational company announced by India is not only glory. Data from the Indian government show that in the past seven or eight years, more than 2,000 multinational companies have suspended their business in India. India has always hoped to become a new "world factory", but multinational companies have "packaged" evacuating this third largest economy in Asia, making Indian Prime Minister Modi's "Indian Manufacturing" plan embarrassing.

"They may be losing interest in India"

The situation is severe

"They (foreign companies) may be losing interest in India," India's "Business Standards" quoted government data on August 12 to get this conclusion. At the end of last year, the Minister of Commerce and Industry in India said that from 2014 to 2021, a total of 2,783 multinational companies closed their subsidiaries or offices in India. Considering that there are only about 12,000 "active" foreign companies that are still operating in India, there are many numbers.

Singh, who is responsible for corporate affairs in India, said recently that as of July 27, 2022, 1777 multinational companies registered in India have "gone", while only 5068 registered multinational companies in the whole India. The Indian government's annual report also shows that the situation is severe. The report states that the number of multinational companies registered in India each year, from 216 in fiscal 2014 to 63 fiscal year, and the proportion of "active" foreign companies in all registered foreign companies, from 80 in fiscal 2014, %Drop to 66%in fiscal 2021.

Coca -Cola sales machine on the streets of New Delhi. Data Map

Although since the outbreak of the new crown pneumonia, technology companies represented by Google, capital companies represented by Blackstone, and aircraft manufacturers represented by Boeing and Airbus are increasing their investment in India, but including Swiss Building Materials Company Hao Rui A number of multinational companies including Royal Scottish Banks and others have announced that they will withdraw from the Indian market. Many of the companies have been "deeply cultivated" in India for many years. For example, German retailer Metro, intends to sell its business in India for about 20 years at a price of about 1.75 billion US dollars. American car manufacturer Ford has "strategized" India market since the 1990s. In May this year, Ford announced that he had abandoned electric vehicles for exporting in India. Last September, the company had decided to stop producing traditional cars in India.

Tax, let foreign companies look forward to

It stands to reason that India has a population of 1.38 billion and is one of the fastest economic growth rates in the world. It should have become the "fragrant citron" for multinational companies, but why do so many multinational companies have decided to abandon the Indian market? Many media such as the German Pioneer Driven News analyzed this, saying that the two factors caused the above situation: First, the reasons for the multinational enterprise itself, including the failure to open the Indian market that is sensitive to price, the strategic adjustment of global development, etc. It is India's business environment that is not conducive to multinational enterprises, including high tariff barriers. The investment environment report released by the US State Department in 2021 describes India as "challenging business place." The Economic Freedom Index announced by the American Traditional Foundation this year shows that India ranks 27th among 39 countries and regions in Asia -Pacific, with a total score below the world average.

"India may be the country with the highest tariffs in the world," the former US President Trump once expressed dissatisfaction. After Modi came to power in 2014, he reformed India's tax law, but at the end of 2018, he began to increase tariffs on a large scale from an average of 13%to 20%. When Trump visited India two years ago, he regretted that the American motorcycle producer Harley Davidson had to pay high import tariffs in India. Harley Davidson has decided to leave the Indian market and discuss with India for a year of Tesla, who also stated that he plans to sell electric vehicles in India. Tesla wants to sell electric vehicles produced in other countries in India, and the Indian government hopes that Tesla will first produce electric vehicles in India before they can give the company's tax discount.

Tax disputes are also one of the important reasons for many multinational companies to discourage India. Except for Chinese companies such as Xiaomi, the Indian tax department conducted tax investigations and issued high tickets on many foreign companies such as Nokia, IBM, Wal -Mart, and Kane Energy. Liu Lin, a senior director who had worked at the Indian Branch of the Four of the Four Cultural Firm, told the Global Times reporter that the tax check -up of the Indian tax authorities is very common for each company, but if you carefully observe and analyze, you will find that they have a certain certain Some preferences, such as investigating more for multinational companies, and stricter for small enterprises; when the economic situation is good, the investigation will be less and the economic situation is more.

According to media reports such as Congress Mountain Daily, due to tax disputes, French Paulleka announced a suspension of new investment in India in July. Since 2007, the British Vodafone and the Indian government have been fought for taxes for taxation. Many years of lawsuit. In 2012, the Indian Supreme Court ruled that Vodafeng won the lawsuit, but the National University of Governance at the time was dissatisfied with it. The Indian Parliament then bypassed the Supreme Court's ruling through a legislation that allowed the tax department to continue to "money" to Voda. At that time, the Indian People's Party, which was the opposition party, called the National University Party's practice as "tax terrorism". However, after the Indian party came to power, it continued to quote this law to "claim debt" to foreign companies. The Modi government abolished this law in 2021, but the previous disputes between India and many multinational companies did not end. "Manageing cholesterol" hinders commercial development

The management of the Indian government also caused a headache for multinational companies. Some people in the Indian business community said that the federal and local governments have formulated various laws, regulations and regulations, and these complex regulations have become "managing cholesterol" and affecting Indian business development. Agavara, partner of the Indian Business Consulting Company Nanji Asia-Anderson, told the Digan Pioneer that in order to improve the business environment, the Indian government has continuously carried out management reform. However Bring uncertainty and cause trouble for enterprises. Some people believe that the Indian government approved a $ 10 billion incentive plan last year to establish a chip industry base in the country, but the global chip giant did not "enthusiastically" India. Government management may be an important reason for this phenomenon.

In addition, doing business in India is extremely cumbersome. According to the Asian Times, the World Bank's data shows that it takes 18 days to register a company in India, which is about one week longer than the average time of the Organization countries. In addition, registered companies in India must go through 12 steps. It takes 34 steps and 110 days to apply for a construction permit. It must be approved by the Indian central government and the state government. 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 problem

How to obtain land has also become a problem for multinational companies to develop in India. According to the India The Print News Network reported, the country's land law failed to balance the interests of the owner of the land and the development needs of India, which combined the investment enthusiasm of foreign companies. Taking India's first high-speed rail-Mumbai-Ahamada Bard high-speed rail as an example, this railway is 508 kilometers in length, of which about 100 kilometers are located in Mahara Stera, where Mumbai is located. In 2015, Japan was approved to build this railway, and the project started in 2017. The Japanese media recently said that this railway is currently only about 10 kilometers, and the lack of land is not in place is the main cause of engineering delay. It is reported that as of September 2021, Mahara Satrabon levied only 30%of project land.

India The Print News Network compared Tesla's production situation in Shanghai's super factory and Japan Suzuki Motor in the Koglatan factory. It is reported that Tesla reached an agreement with the Shanghai Municipal Government and delivered the first car to customers for only 537 days. The factory of the Massiri Suzuki India (the parent company is the Suzuki Suzuki Company) has reached an agreement with the local government to the production of production for nearly 5 years. The important reason for this phenomenon is the difficulty of land acquisition caused by the rising local land price.

In addition to the above -mentioned issues, the Indian government's protection policies for domestic enterprises have become factor restricting foreign companies' investment. In addition, the report of the Indian Observer Research Foundation shows that there are a large number of clauses involving prisoners in Indian business laws, highlighting the risks faced by entrepreneurs in business in India.

What does it mean to send rice to 800 million people?

India has always hoped to become a new "world factory" and launched the "Indian Manufacturing" plan in high -profile in 2014. To achieve this goal, New Delhi has been trying to attract multinational companies to transfer its production base from China to India in recent years. The United States has also hoped that India has risen to curb China. However, reality disappointed the United States and other Western countries.

The United States "Congress" posted a few days ago, calling on the Bayeng government to pay attention to the phenomenon of many multinational companies withdraw from India. The West believes that New Delhi can dig its economic and military potential and curb China's development only by achieving higher economic growth. This can only be achieved only when more foreign investment flows into India and the Indian market. Although the Indian economy is expected to increase by 8%in 2022 and 6.9%in 2023, it is lower than the 12.5%and 8.5%of the initial prediction of the International Monetary Fund. In addition, India's growth is due to its huge consumer market, not an increase in foreign direct investment (FDI). From 2019 to 2021, the FDI ratio of global inflows in India decreased from 3.4%to 2.8%, while China's share in the global FDI increased from 14.5%to 20.3%.

After taking office in 2014, he said that he will take a number of measures to create a good business environment and strive to increase the ranking of India's global business environment report released in the World Bank in 2017 to the top 50. Although India has not achieved this goal as of 2021, in the global business environment report last year, India ranked 63rd and is one of the countries with a faster rising rate in recent years. However, "Indian Manufacturing" has not greatly improved India's manufacturing as planned. According to the Indian version of Fortune Magazine in the United States, New Delhi plans to increase the proportion of manufacturing to 25%of the GDP. However, official statistics show that this situation has not happened. The proportion of Indian manufacturing accounted for the total added value (GVA) from 18.4%in fiscal 2018 to 17.8%in fiscal 2021. In fiscal 2022, this number is expected to rise to 18.2%, which is still less than 25%.

In addition, the "Digan Herald" recently reported that the Parliament Committee of the Indian Parliament pointed out in the report of "Economic attraction of new crown pneumonia: India's Challenges and Opportunities" reported that during the new crown pneumonia epidemic, the production base was transferred to the outside of China to China Most foreign companies have chosen Vietnam, Thailand and other countries and regions, and only a few companies come to India. The Indian version of the US "Fortune" magazine reminded that the above data was not provided by the Indian government to Congress, but the Indian Parliament summarized according to media reports, which shows that the Indian government did not follow the movement of related companies.

The US "National Interest" website posted on August 9, saying that India's labor quality and infrastructure level lag far behind China. In addition, factors such as the division of Indian society and the prevalence of trade protectionism have caused it to not replace China's position in the manufacturing industry. Modi said in an interview with India's Economic Times before that after the outbreak, during the blockade, the Indian government achieved "unparalleled success" in distributing rice from 800 million Indians. The Asian Times pointed out that Modi mentioned numbers is very important for foreign companies who want to enter India. Among the 1.38 billion people in India, 800 million are poverty, low -income or low -income people, and they receive grain subsidies from the government. These people will not be consumers of expensive goods and services in Western companies. Foreign companies will not enter this country because of the population of a country, and people need enough purchasing power to consume their products. In contrast, China is both a big producer and a consumer country. About 800 million high -income people in China. It is estimated that India's purchasing power is only 20%of China.

The Capitol Mountains believe that the West's hope for modernization and prosperity in India has not been achieved at the speed predicted by some people in the first few years of the 21st century. India is currently not enough to become China's "rival". However, although there are various challenges, India's market size and geographical location will still make it favored by some foreign companies.

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