In: Economics
Read the text below and answer this: What regulatory steps can the Indian government take to make the environment more hospitable to investors?
Excessive red tapism, poor infrastructure, complex tax policies, protectionist labor laws, high licensing and inspection costs, congested judicial system and land acquisition problems are major bottlenecks forcing investors from Korea to opt for other Asian countries over India, according to a study by apex industry body ASSOCHAM.
"With just 1.25 per cent share i.e. about $2.6 billion of Korea's $215 billion worth total overseas investments till the end of 2012, India figures quite low on the list of favored investment destinations for Korean companies evidently as investors from Korea have pumped in $39.67 billion in China, $14.18 billion in Hong Kong, $8.38 billion in Vietnam, $6.73 billion in Indonesia, $4.65 billion in Singapore, $3.95 billion in Malaysia and $3.81 billion in Japan," noted a report titled 'India-Korea: Eliminating Barriers and Increasing Investments,' prepared by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
"Though the bilateral trade between India and Korea reached $19 billion clocking nearly 20 per cent growth during 2012, it is relatively low compared to the size and structural complementarities of the two economies," said the ASSOCHAM report.
"Korean FDI inflows have been growing at a very tardy pace as their companies seem to be keener to explore other emerging markets more so as many of them feel that if big company like POSCO can face difficulties, despite government assurances, it would be even tougher for smaller companies to survive in India," highlighted the ASSOCHAM report.
In its report, ASSOCHAM has suggested the government for speedy administrative processes for approval and clearance of big-ticket investment projects through fast track process, development of dedicated world-class industrial parks and supporting infrastructure like logistics, power and water supply, carrying out tax reforms like early introduction of goods and services tax (GST) and developing social infrastructure like Korean restaurants, recreational facilities and others.
"South Korean companies can forge business alliance with their Indian counterparts to become partner in infrastructure development as India plans to tap $1 trillion in infrastructure sector by 2017," suggested the ASSOCHAM report. Moreover, there is vast scope to boost trade in services like information technology (IT), information technology enabled services (ITeS), communications, banking, insurance, education, broadcasting, tourism and healthcare.
The chamber study further states that automobile, infrastructure, nuclear and renewable energy, defence, small and medium enterprises (SMEs) and shipbuilding are some of the key areas with significant potential for investments and co-operation between India-Korea.
Besides, there is tremendous potential for India and South Korea to work together and explore possibilities of promoting third country exports by taking advantage of the various rationalised procedures and investment norms applicable to the Special Economic Zones (SEZs), added the ASSOCHAM report.
India may act as an ideal destination for Korean companies to relocate to counter growing labour scarcity and rising wages back home thereby taking advantage of India's cost-effective human resources, it added.
Further, there is also scope for the two Asian giants to take leverage from complementarities in case of India's growing knowledge-based service industry and Korea's hardware and manufacturing-based economic structure. Besides, India's capabilities in pharmaceutical industry, IT software and auto components indeed complement Korean competence in heavy engineering, automobiles, machinery and electronic hardware. Also significant opportunities for bilateral co-operation also exist in the area of internet and e-governance.
As far as the article is concerned the facts and figures are almost 7 Years old as of 2012 we are into 2019. Now the basis of the article is on the reports published by ASSOCHAM. Which has mentioned several factors such as Excessive Red Tapism, Poor Infrastructure, Complex tax policies, Protectionist Labor laws, High Licensing and inspection costs, Congested Judicial system and land acquisition problems.
It worth mentioning that In Economics and International trade relations the Political and Economical situation of a country is considered a line where all other deals are done with collateral interests. In 2012 the Government of India or we can Say the UPA (United Progressive Alliance) was a mix of group of Political parties in which the single largest Congress Party was not in a position of complete majority. The coalition Government was bound to take decisions based on the choices of their partners associating them. The Political will is necessary for a revolutionary approach, that was missing during the tenure of Government run by UPA (United Progressive Alliance).
After the Lok Sabha elections in 2014 The New formed Government formed Under the Prime Minister Narendra Modi has achieved minimum required seats with absolute majority in the Parliament. We can see remarkable changes afterwards.
Now in 2019 if we talk of the journey India has moved on worth mentioning points below which will completely answer this question -
The above mentioned points definitely confirms that India has done remarkable achievements and still moving strong creating foot-marks all over the world.
The various steps taken for Economic and Trade Reforms and Tax Reforms also -
The above mentioned Initiatives have been the recent measures of the Indian Government that has Increased Economic Growth of India. As of the report of ASSOCHAM of 2012 the recent developments till 2019 has almost answered all the queries.