Cautioning that a weakened India will be bad for the world, new chairman of industry body USIBC Ajay Banga has said policy flip-flops and unpredictable business climate are hampering the country's progress and scaring away foreign investors.
"Of late, we see the disturbing flip-flops on policy and increasing signs of an absence of a predictable investment and business climate.
"These factors and some others are hampering India's progress and growth and scaring away foreign investment," said Banga, who is also president and CEO of MasterCard.
On Tuesday, Banga took over as chairman of US India Business Council (USIBC).
"Together, if we don’t solve these problems, they will fester and multiply over time, not just to the detriment of India but with ramifications for our increasingly interconnected, global economies," Banga said.
He warned that a weakened India is not only bad for India, it’s bad for the world.
"Just think of the consequences —- geopolitical, economic and otherwise —- if we fall short. Make no mistake – the world needs a strong, stable, and prosperous India," he said.
Later, at a press conference, Banga said the issue is that there are going to be bumps along the way.
"They are caused by the political circumstances...What worries me is that along the way those bumps, if they pick up a degree of convincing investors overseas that the predictability of the Indian business environment is changing under their feet that would be complicated," he added.
He said one of the things that makes American investors very comfortable about India is its legal and judicial system and the fact that there is a predictability.
But, Banga added, "When you start changing the rules on taxation...When you change retroactively, you are asking businessmen who have invested money in the country with a certain business model to say, 'oops I can’t deal with this.' Can't. You can’t deal with something that was not there when you were in."