Political Risk Event of the Month: international business and India
Monday, April 30, 2012 at 04:52PM Submitted in part by ICBA Asia, Brazil, India and the USA via the IRC Read & Delete Monthly
In March 2012 the Indian legislature announced changes to its tax regulations that will have a chilling effect on foreign investment. The move overrides recent decisions from the Indian Supreme Court that were hailed as victories for multinational corporations. Compounding the challenge for businesses, the new legislation may turn in to a showdown between India’s legislative and judicial bodies, further muddying the waters in a country infamous for bureaucratic red tape.
In April 2012, several trade groups including U.S.-based Business Roundtable, the Confederation of British Industry and the Japan Foreign Trade Council, representing some 250,000 businesses, sent a letter to Prime Minister Manmohan Singh in response, warning that a number of their members are reconsidering expansion plans into India and that "India will lose significant ground as a destination for international investment if it fails to align itself with policy and practice around the world." The changes, and their retroactive application, could result in a significant flight of investment from an economy that is already struggling with rising inflation, a weakening currency and growing skepticism among foreign investors.
(The Political Risk Event of the Month blog post is a recurring post, on a sporadic basis, at the ICBA blog. ICBA Asia, Brazil, India and the USA, which is International Risk Consultants, Inc. (IRC), has agreed to continue to share these "event" posts with the ICBA blog.)
