Prime Minister Narendra Modi Monday promised a predictable tax system, easier rules and an end to red-tape to make India a favoured investment destination in back-to-back meetings with top industrialists alongside US President Barack Obama.
On his part, the visiting President, chief guest at the Republic Day celebrations earlier in the day, announced $4 billion (about Rs 25,000 crore) in government-backed investments and lending to India. Obama sought to scale up a trade relationship, which, he said, was “defined by so much untapped potential”.
“You will find an environment that is not only open, but also welcoming,” Modi said at a meeting organised by the US India Business Council (USIBC), CII, Ficci and the government’s department of industrial policy and promotion (DIPP). “We will guide you and walk with you in your projects.”
“You will find a climate that encourages investment and rewards enterprise. It will nurture innovation and protect your intellectual property,” the PM said. Intellectual property rights have been a sticky point between the two countries, holding back a bilateral investment pact.
Modi promised to make India one of the 50 most attractive places to do business in the meeting in which Honeywell chairman David Cote, PepsiCo chairperson Indra Nooyi, MasterCard president Ajay Banga, Reliance Industries chairman Mukesh Ambani and Tata Sons chairman Cyrus Mistry were among those present.
India currently ranks 142 in the World Bank’s ease of doing business index.
The US Export-Import Bank would finance $1 billion (Rs 6,200 crore) in exports of ‘Made-in-America’ products, Obama said. The Overseas Private Investment Corporation will lend $1 (Rs 6,200 crore) billion to small- and medium-sized enterprises in underserved rural areas of India. Another $2 billion (R12,400 crore) will be committed by the US Trade and Development Agency for renewable energy, Obama said in a speech.
“There are still barriers,” the US President said, adding there was a need to streamline regulations, cut the red tape and jump through bureaucracy.
In 2012, the UPA government changed laws to impose taxes on older corporate deals such as British telecom giant Vodafone’s acquisition of Hutchison Whampoa’s India assets.
The move hurt India’s image as a growth hotspot.
While the Modi government has said India will not bring on fresh cases of retrospective taxes, there is still some anxiety among multi-national corporations.
“You will find a tax regime that is predictable and competitive. We have removed some of the excesses of the past. We will now soon address the remaining uncertainties,” Modi said.
Banga, MasterCard CEO and USIBC chairman, said “there are a very large number of past cases, in very high dollar values, with a very high level of noticeability.”
“The government should speed up resolution of these cases. I would love to see it rolled back because I believe retroactive taxation is an illogical step,” Banga told HT.
There was a “need to incentivise trade rather than stifle. We need to be transparent, consistent and protective of intellectual property rights,” Obama said.
In an earlier meeting with the India-US CEO’s forum, Modi promised “a policy driven state and consistency in policy”.
Intellectual property rights were an important issue and all countries should together find a solution, he said.