Woodrow Wilson International Center for Scholars Global Fellow Raymond E Vickery, who is a former US Assistant Secretary of Commerce, has spoken of the need for concrete steps in improving ease of doing business in India so that more foreign direct investment (FDI) can move into the country.
He was speaking to reporters at an interactive session organised by Prajavani on Monday.
Vickery noted that Prime Minister Narendra Modi has stated his goal of moving India up from its current rank of 142 in the World Bank’s Ease of Doing Business list to be among the top 50.
According to him, of the 10 metrics tracked by the World Bank for the ranking, Enforcement of Contracts is the one on which India has ranked the lowest (186 out of 189 economies covered). Therefore, to improve in the overall rankings, the best thing to do for India would be to zoom up on Enforcement of Contracts, he said.
“If a deal is signed, it should move forward in accordance with its terms and conditions. In the US, contracts are enforceable. It is very fundamental in bringing in ease of doing business,” he said.
“At the judicial level, it is not enough merely to say that India has an independent judicial system. The backlogs in Indian courts go up to ten years,” he said.
Suggests way out
Vickery suggested two ways to resolve this. One, India should constitute commercial courts to resolve business disputes.
“You should also have alternative dispute settlement mechanisms to resolve issues via arbitration,” he said.
When asked about other issues affecting the Ease of Doing Business ranking for India, he said the country will have to do more to tame corruption.
“As per the data collected by Transparency International, India has a ranking of 85 out of 175 countries in the Transparency Index. Also, taxation issues are very fundamental,” he said.
Vickery criticised the government’s decision to legislate on retrospective taxation. Commenting on the visa issues pertaining to Indian IT services companies, he said H-1B and L1 visas have become controversial.
“Just as you have people who oppose foreign investment, we have people who want protectionist benefits. In my judgment that is not going to be successful. Limitation of H-1Bs and L1Bs in a significant sense is not going to be successful even with the new immigration bill and even though there are a couple of very powerful US senators who want to do it,” he said.
Vickery said that opening up of multi-brand retail has lots of advantages.
“It allows the aggregation of capital from retail activities. So up the line it can be invested in cold storage, food processing, etc. in order to lower the price to the consumer. Now, that’s the reality and how you do that without hurting the poorest of the poor has to be addressed,” he said.