India safe place to invest: Lord Paul

"At a time when guerrilla wars, insurrections, drug wars, kidnapping of businessmen and like happenings are so frequent, there are advantages in the stability of relatively lower violence societies. When ethnic tensions are worsening in many important countries, India has managed religious and ethnic issues rather well," Lord Paul said here last night.

"Our company, Caparo, has built 32 plants in India in the last eight years and we employ almost 9,000 people. We strongly believe there is long term potential in India and we want to be part of that Growth," Lord Paul, chairman of the Caparo Group, said.

Speaking at the Anglo-Indian Summit on 'Investing In India', he said every foreign investment decision was a comparative judgement - an evaluation of geo-risk.

"By these yardsticks I think India holds up pretty well," he said, adding "we live in a world of violence and tension - and business is often the first victim of these forces."

"India's democracy, slow and cumbersome as it is, provides an assurance that business environment will not be held hostage to unanticipated upheavals," he said.

Lord Paul also made four observations which he said might be helpful in the larger context of evaluating business opportunities in India.

Lord Paul noted that in India there was almost universal acceptance of free enterprise economics by all segments of political society.

"Social democrats, communists, regional parties and almost the whole spectrum of the Indian political universe is now committed to globalised capitalism. There is a sea-change from the past and I believe it will endure," he said.

He said economic performance is becoming the only rationale for rewards at the polls, as is seen in most recent regional and state elections. "The impact of this in creating business-friendly policies is increasingly evident."

Secondly, he pointed out that the state governments are acquiring a greater degree of importance and policy-making independence.

"A very significant and growing part of the country is now governed by political groups different from the national government. These state governments are more and more impatient with the slowness of New Delhi," he said.

"They are making policy, demanding better infrastructure and trying to streamline their bureaucracies. All of them see the advantages of foreign involvement in their economies. If this trend continues, it will produce significant improvements in some of the tedious bottlenecks that have made doing business in India tiresome," he added.

"There is another new element that is making a major impact on Indian society: the rise of grassroots civic organisations. In every part of the country this civil society activism is evident and is being strongly supported by India's independent news media," he said.
Lord Paul said the huge and spontaneous response to anti-corruption movements led by prominent social activists can only escalate. "All this has had an effect on the new capitalistic society, and in India there is more and more recognition that they must not abuse the system."

Lord Paul said: "when we denounce corruption we must also remember that corruption is a two-way street - both givers and takers are equally at fault."

While demand - side is local, a large part of supply - side comes from foreign enterprises who see it as a way to obtain easy short cuts, he said, adding while India has to curtail its side, those who do business in India have to be more conscious that they should be less part of the problem and more part of the solution.

Lauding the role of Indian culture, Lord Paul said he has always believed that it has a strong entrepreneurial heritage.

"This is evident in the traditional social structure - doing business is as Indian as meditation," he said.

Unfortunately, he said for various reasons, the post-independence Indian state discouraged entrepreneurial activities and submerged it in regulations, licences and other obstructions.

But sooner or later, the natural tendencies of culture reassert themselves. "And that, I feel, is what has happened in the past decade or so - incrementally perhaps, but the trend is clear," he said.

"India is returning to its natural condition and this will continue. The costs of imposing an alien straight jacket on the economy have been so high that it is unlikely to happen again. In short, Indian culture is the best insurance against mis-guided economic nationalism in the future," he said.

Lord Paul said Mahatma Gandhi was "both an other-worldy saint and deeply appreciative of business activities."

"His blend of idealism and practicality, of internationalism and nationalism, is a better guide to and for India than the ideologies and dogmas that have constrained the country."