Can a new government lead to lasting change?

Executive Summary

India, with 1.25 billion people and a growing middle class, offers a vast market for global companies. The government of Prime Minister Narendra Modi, elected in mid-2014, has promised to improve the climate for all types of businesses and has reached out to foreign investors. Indeed, there are signs the economy is picking up throughout the vast, multicultural land. But the obstacles are great. Corruption and red tape remain entrenched. Businesses continue to be concerned about the workforce and whether it can meet the needs of the nation's modernizing economy. Infrastructure problems make day-to-day transportation and operation a challenge. Even though the government has promised to spend billions of rupees to improve the situation, it's unclear when progress will become visible.

Resources

Bibliography

Books

The World Fact Book,” Central Intelligence Agency, 2013–14, http://tinyurl.com/ypn8hx. India is turning into an open-market economy, with an emphasis on service-sector growth, and is poised to improve further with economic policies promised by the newly elected government, according to this U.S. government-prepared reference book.

Makar, Eugene M., “An American's Guide to Doing Business in India,” Avon, 2008. Coming to terms with India's business culture can be challenging; a strong local component or joint venture can help.

Manian, Ranjini, “Doing Business in India for Dummies,” Wiley Publishing, 2007. A specialist in helping international companies relocate workers to India discusses the basics of doing business in her native land.

Venkatesan, Ravi, “Conquering the Chaos: Win in India, Win Everywhere,” Harvard Business School Press, 2013. India has a myriad of tax, labor and other laws that are sometimes creatively interpreted by government officers, which can make navigating the system chaotic and uncertain, writes one of the country's most prominent business leaders.

Articles

Ahluwalia, Montek Singh, “Lesson's from India's Economic Reforms,” in “Development Challenges in the 1990s,” World Bank and Oxford University Press, 2005, http://tinyurl.com/nhczq6x. The 1990s were crucial to India because economic reforms gradually removed state control and freed the economy, according to an economist who was a member of the national planning commission.

Anand, Geeta, “India Graduates Millions, but Too Few Are Fit to Hire,” The Wall Street Journal, April 11, 5, 2011, http://tinyurl.com/mu9p3fu. Companies find that Indian engineers provide quantity over quality.

Bagri, Neha Thirani, “Narendra Modi, India's Leader, Moves to Reshape Labor Rules,” The New York Times, Oct. 16, 2014, http://tinyurl.com/mjsuelx. India's new prime minister plans to change labor laws to attract business.

Chatterjee, Siddharth, “Corruption–An Epidemic of Epic Scale in India,” The Huffington Post, April 4, 2014, http://tinyurl.com/ptdowzp. Corruption stands in the way of India's economic greatness, according to a diplomat who has worked with several nongovernmental organizations in India and elsewhere.

Doval, Pankaj, “Doing business in India difficult, Honda Motor chief says,” Times of India, Sept. 13. 2014, http://tinyurl.com/oaulccd. Several international executives say it is difficult to do business in India because of its tax system.

Kumar, Manoj, and Krishna N. Das, “India's Modi steps up economic reforms, eyes privatization,” Reuters, Oct. 20, 2014, http://tinyurl.com/lb5dgfl. India's prime minister seeks to privatize many public-sector assets, including state-controlled coal and oil companies.

Kumar, S. Ramesh, “Addressing Diversity: The Marketing Challenge in India,” The Wall Street Journal, Oct. 20, 2009, http://tinyurl.com/nhty7qv. Diversity among India's regions is both a challenge and an opportunity for targeted marketing, according to a marketing professor at the Indian Institute of Management in Bangalore.

Rajaram, Danielle, “The Promise and Peril of India's Youth Bulge,” The Diplomat, May 3, 2013, http://tinyurl.com/om3ltjg. More than half of India's population is under 25, which provides opportunities for businesses as well as challenges in providing education and training.

Sincavage, Jessica, et al., “Labor costs in India's organized manufacturing sector,” Monthly Labor Review, 2010, http://tinyurl.com/meqfr9l. India's hourly compensation for manufacturing workers is one of the world's lowest, making it attractive for labor-intensive business.

Venketesan, Ravi, “A Crossroads for India, and Its Business Landscape,” Harvard Business Review, May 23, 2014, http://tinyurl.com/op6bcow. The election of the business-friendly Modi government is cause for optimism but not euphoria, as the country is beset with lingering problems, says the former chairman of Microsoft India.

Reports and Studies

“Corruption Perceptions Index 2014,” Transparency International, Dec. 3, 2014, http://tinyurl.com/n7rmnlb. India scores 38 (100 is very clean) and ranks 85th out of 175 nations in the Corruption Perceptions Index.

“Risk, Uncertainty and Opportunity in a Changing Tax Landscape: 2014 Tax Complexity Survey,” Deloitte, 2014, http://tinyurl.com/lpvexte. India has some of the most unpredictable tax laws in the Asia-Pacific region.

“World Economic Outlook 2014, Recovery Strengthens, Remains Uneven,” International Monetary Fund, 2014, http://tinyurl.com/lwebb3w. Indian economic outlook appears set to improve, with gross domestic product growth poised to strengthen after the slowdown of the last few years.

Schwab, Klaus, and Xavier Sala-i-Martín, “The Global Competitiveness Report 2013–2014,” World Economic Forum, 2013, http://tinyurl.com/pfje95y. India, ranking 85th of 148 nations, has major infrastructure problems that hinder economic growth.

Singh, Arpinder, et al., “Bribery and corruption: ground reality in India,” EY Fraud Investigation & Dispute Services Practice, July 24, 2013, http://tinyurl.com/m4zgfha. Despite India's strong economic indicators, consulting firm finds, corporate India is steeped in a culture of corruption that has proven detrimental to the nation's economy.

The Next Step

Corruption

Dutta, Saptarishi, “The Indian government has a new anti-corruption weapon that's stashed in your phone,” Quartz, Nov. 3, 2014, http://tinyurl.com/l9e3dvb. Indian government and law enforcement agencies have created their own helplines on the popular text messaging mobile application “WhatsApp” for users to report corruption.

John, Sujit and Shilpa Phadnis, “Oracle India faces bribery charges,” The Times of India, Oct. 15, 2014, http://tinyurl.com/k7x6sw9. Technology corporation Oracle's India branch experienced its second scandal in two years after a whistle-blower alleged that one of its “channel partners” engaged in bribery to win a contract with the Andhra Pradesh state's police department.

Kaushik, Preetam, “Bold Steps Needed To Fight Corruption In India,” Business Insider India, Oct. 21, 2014, http://tinyurl.com/lwekfkc. A string of high-profile corruption scandals involving Indian government officials and illicit transactions by companies has made some international investors wary of India.

Infrastructure

Das, Krishna N., and Sonali Paul, “As India opens up coal sector, global miners cool on investing,” Reuters, Feb. 3, 2015, http://tinyurl.com/lwbm6su. India's huge coal market is finally open to foreign investment after years of tight state control, but some international companies are proceeding warily because of difficulties operating businesses.

Fairclough, Gordon, “India Races to Bolster Border Infrastructure, Chasing China,” The Wall Street Journal, Oct. 30, 2014, http://tinyurl.com/onnvk5s. India is building runways, military outposts and roads near its northeastern border, shared with China, to boost its infrastructure and military presence in the region.

Kazmin, Amy, “India struggles to build up infrastructure dream,” The Financial Times, July 29, 2014, http://tinyurl.com/q7x7ulb. A decade of stalled infrastructure projects by developers and overlending by banks has crippled India's ability to develop its infrastructure.

Kohli, Jasmine, “Indian hospital shows how mobility can improve health care in rural areas,” InformationWeek, Nov. 10, 2014, http://tinyurl.com/p7eveqh. A rural hospital system and an information technology services provider have developed a mobile application that gives rural Indian communities digital access to doctors.

Women's Safety

Aggarwal, Varun, “Ineda System to build chips that can improve women's safety,” The Economic Times, April 12, 2014, http://tinyurl.com/m6sspcd. A Samsung-funded project by a software chip company will create wearable devices for Indian women to contact police via GPS signals if they are in danger.

Chandran, Rina and Bibhudatta Pradhan, “India's Women's Vote Becomes More Independent,” Bloomberg Businessweek, May 8, 2014, http://tinyurl.com/o7u3zd7. Rising literacy rates, financial independence and outrage over violence against Indian women have led many women to vote independently of their husbands in recent elections.

Pearson, Obiko Natalie, “India's Message to Women: Come Visit, We'll Become Safer,” Bloomberg Business, Jan. 22, 2015, http://tinyurl.com/k6523yh. India's tourism minister says the country needs to emphasize cleanliness and safety, especially for women, to encourage more international visitors.

Workforce

Shivakumar, Girija, “India is set to become the youngest country by 2020,” The Hindu, April 17, 2013, http://tinyurl.com/cbbch79. According to a report prepared by a Mumbai-based technology initiative partnering with the United Nations, India will have the youngest workforce in the world, with a median age of 29, in about six years.

Organizations

American Chambers of Commerce in India (AMCHAM-India)
PHD House, 4th Floor, 4/2, Siri Institutional Area, August Kranti Marg, New Delhi, 110 016
Tel: 91-11-2652 5201/ 2652 5202; Fax: 91-11-2652 5203
amcham@amchamindia.com
www.amchamindia.com
Association of U.S. business organizations operating in India.

Confederation of Indian Industry
The Mantosh Sondhi Centre, 23, Institutional Area, Lodi Road, New Delhi, 110 003
Tel: 91-11 4577 1000/ 2462 9994-7; Fax: 91-11-2462 6149
info@cii.in
www.cii.in
Industry-led and -managed organization that plays an active role in India's development process.

Department of Industrial Policy and Promotion
Ministry of Commerce and Industry, Government of India, Udyog Bhawan, New Delhi
Tel: 91-11-2306 1204/2306 1222-29
http://dipp.nic.in/English/default.aspx
Indian government agency charged with facilitating flow of investment and technology and monitoring industrial development.

Embassy of India
2107 Massachusetts Ave., N.W., Washington, D.C. 20008
Tel: 202-939-7000, Fax: 202-265-4351
www.indianembassy.org
Official Indian government presence in the United States that provides advice to American companies on Indian products and export/import rules and regulations; also assists Indian businesses in dealing with U.S. trade policies.

Federation of Indian Chambers of Commerce and Industry
Federation House, Tansen Marg, New Delhi, 110 001
Tel: 91-11-2373 8760-70, Fax: 91-11-2332 0714, 2372 1504
ficci@ficci.com
www.ficci.com
Nongovernmental, not-for-profit organization that serves as voice of India's business and industry.

Franchising Association of India
3rd Floor, Champion Building, 15-Parsi Panchayat Road, Andheri (E) Mumbai-400 069
Tel: 91-22-2827 2490
www.fai.co.in/
Nonprofit group of franchising-related interests in India.

India in Business
Ministry of External Affairs, Government of India
Tel: 91-11-4901 5470, Fax: 91-11-4901 5471
asdpa@mea.gov.in
indiainbusiness.nic.in/newdesign/index.php
Government-run group whose primary aim is to accelerate the pace of foreign direct investment in India.

National Association of Software and Service Companies
International Youth Centre, Teen Murti Marg, Chanakyapuri, New Delhi, 110 021
Tel:91-11-2301 0199/4767 0100, Fax: 91-11-2301 5452
info@nasscom.in
www.nasscom.in
Nonprofit association that represents the Indian information technology industry.

Planning Commission
Room No. 517, Yojana Bhavan, Sansad Marg, New Delhi, 110 001
Tel: 91-11-2309 6620, Fax: 91-11-2309 6764/2309 6779
plancom@nic.in
http://planningcommission.nic.in/
Indian government commission that assesses resources in the country and prepares plans for effective and balanced use of resources for economic growth.

DOI: 10.1177/2374556814567458