India can’t catch up with China: what’s in the way?


India can't catch up with China

Finance Magnates writes that tax penalties, high taxes, and low intellectual property protection are slowing down capital investment in the subcontinent. Such well-known brands as Shell, Nokia, IBM, Parimatch, Walmart and Cairn Energy faced such challenges in India.

Due to the complex tax system and inadequate protection of intellectual property, many foreign investors postpone their plans to enter the Indian market or are forced to leave it.

Attracting investments from Amazon, Parimatch, Foxconn Group and Wistron Group, among other international companies, would help improve the business environment. In particular, simplifying the tax system and strengthening protection of intellectual property rights can make India more attractive to foreign investors. Such steps will not only support the local economy, but also accelerate its integration into the global economic system.

However, so far, things look different. For example, the global minimum tax rate for non-residents is a minimum of 15% for multinational corporations with business revenues of more than €750 million. According to Sagar Narendrakumar Surana, a certified specialist in the fintech sector, in India, corporate tax for international companies is above average, making 30% compared to 23% globally.

Another problem is excessive tax penalties. Companies such as Amazon, Foxconn, and several other businesses from Japan and South Korea have faced heavy penalties for alleged investment concealment, tax evasion, and account fraud in India. Multinational companies such as Shell, Nokia, IBM, Walmart and Cairn Energy have come under high-profile tax investigations. Some companies, including Parimatch, have not been able to launch a business in India at all.

As a result of these factors, foreign businesses continue to pack up and leave the subcontinent.

According to some experts, if India breaks these barriers, it has a chance to become a $5 trillion economy by 2027 and a true center of global business. “Parimatch and other companies have already shown their willingness to invest in India, waiting for the government to create more favourable conditions,” says the article.

The Indian government can take note of these comments and suggestions in order to attract international investment and accelerate economic development. If this happens, Parimatch and other global players could be key players in scaling the Indian business environment.

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