Friday, 6 July 2007

China vs. India - Investor-Friendliness
by Indra

June 13, 2006

From 1983 to 1997, I was closely associated with the automotive industry of Japan. It was the time when Japanese automotive industry was showing interest to come in big way in India. Toyota, Nissan, Mazda, Mitsubishi, and Isuzu, beside the only successful enterprise of Suzuki collaborated with some Indian partners. Most of the collaborations were limited to technical assistance with very little equity participation. They didn’t find the overall economic atmosphere conducive to go ahead in big way. I remember the red tape in bureaucracy, and the type of licenses and clearances required for every thing. Once, while in Delhi, some of the Japanese friends wanted to have some Japanese food. I couldn’t find any restaurant anywhere. I could very well understand and appreciate the need of food of your own land when you are in a foreign land. We were lucky that in Japan we could get an Indian restaurant almost everywhere. Even that small town Hokke Club Hotel in Kawasaki had an Indian restaurant in its basement.

Last week, I was reading a similar story about the China that shows why we failed to attract the manufacturing biggies of Japan whereas the Chinese have succeeded in getting all the big names in every sector from all over the world including India.

Back in 2002, Girija Pande, Asia Pacific Head, TCS (Tata Consultancy Services), used to fly down to Hangzhou province in China from his Singapore office every weekend. He was on a mission to find a site for the company’s third development center after Shanghai and Beijing. Every time he visited the province, the mayor welcomed him. During one of his casual exchanges, Pande remarked that the lack of a good vegetarian restaurant would disappoint the mostly South Indian project managers of TCS. When he visited the province for the fourth time, the mayor took him to a spanking new vegetarian restaurant promoted by the state government. This is the Chinese hospitality towards foreign investors.

With all these inputs from the India Inc available and known to the ministers and bureaucracy, why can’t they change if they want FDI to come in a big way? Why are they happy with Mauritius being the biggest FDI country for India? Why can’t Manmohan Singh’s government bring changes in qualitative and quantitative term? Don’t they know that it takes 71 days to start business in India when for China it is 48; it takes 67 days for registering property in India when in China it takes 32; it takes 90 days to arrange funds in India when it takes 40 days in China; and it takes 10 days in resolving insolvency in India when it can be done in 2.4 days in China? I remember the years it took to finalise funding by bankers when I was working with the projects of HM in which Isuzu trucks were to be produced at Vadodara. By the time we started because of the changes in yen and dollar exchange rates, the project became unviable. Even today, our efficiency is doubted. With all the media reporting of improved attractiveness for investment, India hardly gets the respectable share of FDI.

With the Great Trinity of Manmohan Singh, Montek Singh, and P. Chidambaram at the head of the country, we expect at least these procedural bottlenecks resolved, if not any other human values related things such as built-in hospitality.

Dear Indra jee,

I agree with your arguments with few reservations.

Yes, you are right when you talked about hospitality and importance of home food in foreign land. This argument is only for the feel good factor for investors and may be one of the factors for the low turnout of foreign investments in India. It cannot be major reason.

In India also you will get foreign restaurants.

In Chennai where Daewoo has a plant, they have got a restaurant. In Bangalore, you may get restaurants from many countries. In Delhi and Mumbai, there are plenty of restaurants for foreign nationals. I don't think govt can do all the works of opening hotels for a few people.

In Gunsan, Korea TATA has taken over Daewoo, many employees have come from India and used to come regularly in a team from Jamshedpur. They are hundred in numbers or more than that. Employees get Indian food only at company premises.

In the same way, Samsung has got a large number of employees from India and also from SISO, Bangalore and Samsung Electronics, NOIDA. Large number of employees used to visit in a team. They also can enjoy Indian food at company premises.

There are Indian hotels and restaurants but only in Seoul. One Indian restaurant is now going to open their branch in Daejoen where we live because of the increasing Indian, Pakistani and Bangladeshi population. And this also is being done by private investors, a group of Chakra hotel owned by Chennai-based businessmen settled at Seoul.

Korean govt doesn't take any step for opening any Indian restaurants even though large Indian population is day by day increasing here at Korea. Indian IT firms and IT engineers are doing very well for the development of Korean economy.

I mean to say, this extra hospitality has been done by Chinese govt because they want to lure Indian businessmen for starting IT firm in China and taking advantage from that under the condition that many Indians will visit that place where TCS started their operation. This is just one example.

Certainly Indian govt can also do that but that also depend on case by case basis, not always for each and every company cause.

For the less turnout of the Investors in India, there are many other reasons.

In India, we still don't have enough infrastructure for the development of an R&D center. Bangalore is the heart of IT as pronounced by the Indian and state govt but if you go to Bangalore, you will notice that the whole city has become standstill because of the growing population and poor road and other infrastructural facilities.

Industries should shift towards Delhi (NCR region), Mumbai, Chennai, Kolkata, Pune, Chandigarh, Hyderabad, Ahmedabad where these difficulties are comparatively less.

In whole India, we have a lack of infrastructure. In Delhi, there is power cut at least once in a day in hot seasons. In rainy and winter seasons also, we have power cuts. Roads are still not up to the mark. Only main roads are looking good and in good condition but when you enter inside the city on the link roads, condition is pathetic everywhere in India. Just after rain, water logging starts and then starts many types of health problems.

But in foreign countries, that is reverse. I have never seen power cut in my two years in Korea. Roads are 6 lanes, there is no traffic jam. All the cities are connected by expressways. We have expressways only between Pune-Mumbai, Delhi-Noida, Jaipur-Delhi and few more areas.

Yes there is still "babudom" in central as well as state govt but for the opening of the firms govt has eased rules and regulations after 1990 thereby getting good responses from private investors from all over the world.

China has grown well and given more attention to its infrastructure. Mauritius and other nearby countries have invested more in roads, electricity, water and other infrastructural facility.

In my view, India has to improve its infrastructural facilities first. Then and then only we can expect heavy investment from across the border. - Bibhuti Bikramaditya, Daejeon, S.Korea - June 15, 2006

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