U.S. Companies’ Wish List for Doing Business in India

U.S. President Barack Obama meets with Indian Prime Minister Narendra Modi in the Oval Office of the White House September 30, 2014 in Washington, D.C.

Alex Wong/Getty Images

As U.S. President Barack Obama heads to New Delhi, American multinationals hope Indian Prime Minister Narendra Modi will improve conditions for business in India, according to the U.S.-India Business Council.
Mr. Modi and his government have brought in the past six months “the belief that change can happen,” Dianne Farrell, acting president of USIBC, told The Wall Street Journal
“What we look for, what investors look for, is consistency, predictability and transparency. Wherever they are, not specific to India, those are the requirements for investment,” she said.

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U.S. multinationals are interested in investing in oil and natural gas, technology, food and agriculture as well as pharmaceuticals and medical devices, Ms. Farrell said.
Here’s Ms. Farrell’s wish list for favorable conditions for the U.S. to do business in India:
Change in Tax Laws
“There’s still anxiety about retrospective tax and certainly it’s very comforting to hear this government say they will not invoke retrospective [taxation]… nevertheless the law remains on book,” said Ms. Farrell.
In 2012, India introduced a retroactive tax on foreign companies that buy Indian firms overseas.
Vodafone Group PLC, General Electric, AT&T Inc., and SABMiller PLC  have all been involved in disputes over taxes in India. Although Mr. Modi’s government hasn’t applied the rule to any new cases, the law is still in place.
Meanwhile, the proposed uniform Goods and Services Tax would help U.S. businesses become more profitable, Ms. Farrell said. “Because for India to become a common economic market, as opposed to dealing with complexities of state-by state-commerce – [will be a] huge game changer,” Ms. Farrell said.
Fix Patent Rules
U.S. companies are concerned “that they have no control over where their intellectual property is going” Ms. Farrell said.
Pharmaceutical companies have been crying foul over Indian patent rules as they aren’t able to recover billions of dollars in investment for creating new drugs because cheaper varieties are made available in India.
After stiff opposition, New Delhi is revamping its patent rules.
Ease of Doing Business
“There’s no question that companies are beginning to look at India as a focal point within Asia when it comes to manufacturing,” Ms. Farrell said. “That’s not to say that there aren’t some serious ‘ease of doing business’ problems that have to be worked through.”
There are also concerns around procuring permits, land use restrictions, labor law, infrastructure and “seamless power” Ms. Farrell said.
“Companies need to have reliable and predictable sources of power…simple things like road and rail infrastructure to get products to market,” she said.
Government Procurement Obstacles
U.S. technology firms want the Indian government to remove a clause that gives preference to domestically made equipment and a tax on imported electronics to be changed.

“I think that diversifying the kinds of market by eliminating some of the market access restrictions that have occurred, [for example,] on the tariff side,” would attract investors says Ms. Farrell.

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