Recently, India and the world witnessed
two important events.
One was the “Make In India” Week in Mumbai;
attended by many well-known names of the country’s business community and of rest
of the world.
The other was the announcement of the Government
of India’s Union Budget for FY 2016-17.
Coincidentally, and starkly, a third event
took place in between these two happenings. This event, as is being
increasingly described by influentially disapproving voices in India and abroad,
was the Centre’s mishandling of the speech-related student gathering at Delhi’s
Jawaharlal Nehru University (JNU).
Packaged as one of the pet themes of Prime
Minister Narendra Modi, “Make In India” also aspires to resurrect the country’s
slowing-manufacturing sector, by encouraging greater participation in
production activities by foreign companies, in India.
The government has been working at various
levels to introduce measures for improving ease of doing business in India. Reduced
documentation, an increasing use of IT to streamline and improve the process of
applications and approvals and the passing of The Companies (Amendment) Act,
2015, to remove certain impediments as well bring in other improvements, are
some of the initiatives.
India’s ranking in ease of doing business
continues to hover around the 130 and upwards mark since the past two years
according to the World Bank rating. Even though it dropped from 134 to 130, in
2015 to 2016 respectively, the ranking is still very low.
While the regulatory aspects and paper
work really do matter when one hits the ground to begin something in terms of
business, it will be counter-productive to dismiss the importance that
perceptions play.
The tangibles are already being worked on
for a long time, with every successive government that comes to power. A
December 2015 note by the Government of India’s Department of Industrial Policy
and Promotion (DIPP) mentions a report titled “assessment of state
implementation of business reforms” which covers an assessment of reforms
implemented by Indian States and Union Territories (UTs), from the period of
January 1 to June 30, 2015. Based on a 98-point action plan for business
reforms agreed to between the DIPP and the States and UTs, the assessment reveals
a large variance in the implementation with Andhra Pradesh showing a high score
of 70.12% and Kerala, a State well-known for its high levels of literacy,
showing a low 22.87%.
But who is working on maintaining good perceptions?
Though the topic of why perceptions matter can be debated endlessly by those
who think it matters and those who don’t, the reality is that perceptions make
a big mark, especially among foreign investors. Even though some of them may
not have any other option but to invest in India, out of economic and business
necessity, the negative perception on how difficult it is to run a business in
India goes hand in hand with the concept of ease of doing business as well as impinging
on future investments in the country by the same companies.
What are those happenings which can negatively
impact the perception of foreign companies which wish to do business in India
or are looking at expanding their already-existing footprint in the country?
Among the most influential
perception-impacting factors are human-related ones such as frequency of labour
unrest in a particular region or location, social unrest, political unrest,
among others.
While corruption in India is well-known (according
to Transparency International’s 2015 ranking of 168 countries, it is placed 76th),
it may not take centre stage in comparison to current human-related happenings
which would have definitely jolted the perception of foreign investors – both,
invested and potential.
In terms of labour unrest, the violent
protests at the factory of Maruti Suzuki Motors in Manesar in Haryana, during
which a senior Human Resource official was burned to death, has been among the
most frightening incidents in the recent past. Though the company may not have cited
this as the reason for its move to invest in the State of Gujarat as well, it
is the author’s assumption that perhaps the incident at Manesar encouraged it
to look at a “safer” location for future investments.
For many years now, the two pluses that
are often cited for why India has been a favourable investment destination are
that it is a democracy (the world’s largest) and largely English-speaking.
Universities in most democratic countries
and the students that comprise them, are seen to be the symbols of not only the
freedom of inquiry, free speech and expression, but of democracy itself.
Many of India’s universities
are looked at with great admiration by, for instance, the Western world. Their
progress, development and nurturing and the peace within its walls are taken as
a yardstick that all is well.
Make no error in judgement by
denying that the world was not closely watching or following the way in which a
series of so-called anti-national events at JNU were handled by the Centre and
the police and the arrest of the president of the JNU Students’ Union Mr.
Kanhaiya Kumar. The world was also closely watching the lawyers who displayed
unprecedented brazenness and turned violent on the accused as he was brought to
court, and the journalists who were doing their job of reporting there. And later
when authentic reports of the so-called seditious sloganeering-related videos being
doctored emerged, one can easily imagine the damage that would have been done
in the eyes of those who think highly of India’s democracy and rule of law.
In a recent interview to senior
journalist Mr. Bhupendra Chaubey of the TV
channel CNN-IBN, well-known CNN anchor Mr. Fareed Zakaria said, “I would say
that the reaction of the United States and the world, to some of the things
that have been happening in India on the social front or religious front,
issues of communal harmony, has been negative. People have been surprised that
some of these things have happened because there was a sense and a hope that
Prime Minister Narendra Modi was going to represent all of India and all
Indians. I think that there isn’t anything particular that Prime Minister Modi has
done, but there is a feeling that his party and elements within it have done
things that have been divisive. I am telling you that this is purely me
reporting to you about the reaction that has taken place in the West.”
A number of articles were
published in publications such as The New
York Times, The Guardian, The Huffington Post, among others, which
have been very critical about the way the events at JNU were handled as well as
the arrest of Mr. Kumar. It is inevitable that many readers from all over the
world and from all walks of life, including business, would have read them.
This does not help the image
of India.
The manner in which the recent
events at JNU and other-related events were handled, could cost India dearly in
attracting foreign investments and a repeat of it would be even more disastrous.
Copyright © Tarun Dalaya, 2016.
Views expressed are personal.
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