Modi promises predictable tax regime; Obama raises IPR issues
Prime Minister Narendra Modi today wooed US investors promising a predictable tax regime, removing “remaining uncertainties” and an open business environment as President Barack Obama pledged USD 4 billion in investment for trade with India.
At the same time, Obama flagged US concerns over trade barriers, intellectual property rights and sought consistency and simplicity in regulatory and tax regime for ease of doing business with India.
The two leaders made forth their views clear in back-to-back meetings with top corporate leaders of both the countries at a CEOs Forum and a Business Summit.
Modi asserted that his government has removed some of the “excesses of the past” and said “we will now soon address the remaining uncertainties”, an apparent reference to the retrospective taxation law of the previous government that put off global investors.
“You will find environment that is not only open, but also welcoming. We will guide you and walk with you in projects. You will find a climate that encourages investment and rewards enterprise. It will nurture innovation and protect your intellectual property.
“It will make it easy to do business…. You will find a tax regime that is predictable and competitive. We have removed some of the excesses of the past. We will now address the remaining uncertainties,” Modi said at the USIBC meeting.
He also promised to take charge of implementation of big projects which he would personally monitor. “We will match your expectations… I am always available. I will listen to you.”
Referring to federal structure in the country, he said he would work with state governments to narrow the gap in approach between the Centre and states and address conflicts.
In his speech, Obama sought “consistency” and “simplicity” in regulatory and tax environment in India besides redressal of issues relating to intellectual property rights to significantly increase trade and business between the world’s two largest democracies.
US exporters, he said, are “very concerned” about issues like IPR as the US economy was increasingly becoming a knowledge-based economy.
He said “absence of an effective IP protection” in India was affecting business. “We tend to operate at the higher ends of the global value chain.”
The US President announced additional steps that would generate more than USD 2 billion of trade and investment with India for thousands of jobs in both countries.
“Specifically, over the next two years, our EXIM Bank will commit up to USD 1 billion in financing exports, Made-in- America exports to India.
“Overseas Private Investment Corporation will support lending to small and medium business across India that we anticipate will ultimately result in more than USD 1 billion in loans in underserved rural and urban markets,” he said.
Obama said US Trade and Development Agency will aim to leverage nearly USD 2 billion fresh investment in renewable energy in India.
He said there was huge scope for improving infrastructure in India and enhancing the road network and broadband connectivity will help the business grow significantly.
“There is great interest on part of US companies to find consistency, clarity, greater simplicity in regulatory and tax environment in India. If that occurs I think we are going to see lot more business in India. That is consistent with many of the reforms Prime Minister Modi has articulated,” he told the meeting of select group of CEOs.
Promising ease of doing business, Modi said it would involve less paperwork, more digitalisation and same format for various projects. Skill, scale and speed will be the mantra for the government, he said.
Obama said Modi has brought new energy and vigour in redesigning the “architecture” in India to facilitate greater growth and investment.
“Modi has brought new energy and vigour to redesigning the architecture here in India so that more business, greater growth, greater investment can take place,” he said.
Obama said specific things that need to be done by two countries is to make it easy for doing business in both the countries.
“There are still barriers,” he said adding there was a need to streamline regulations, cut the red tape and jump through bureaucracy.
Appreciating Modi’s reform initiatives to bring investments, Obama said, “We need to incentivise trade rather than stifle. We need to be transparent, consistent and protective of intellectual property rights.”
“We can work together to develop new technologies to help India leap forward and partner in next generation clean energy projects and upgrade railways, roads, ports, airports and broadband connectivity to provide best connectivity to the world,” he said.
He also referred to the three smart cities that US would be helping India in setting up and upgrading infrastructure.
Reviewing his visit, Obama said the two countries have “a number of concrete” steps for more investments and referred to breakthrough in civil nuclear agreement, defence cooperation, renewable energy and bilateral investment protection treaty (BIPA).
“When leaders make agreements, our agencies and bureaucracy will follow through,” he said. “We can grow and we can prosper together.”
Obama referred to the current bilateral trade of USD 100 billion and compared it to US-China trade of USD 560 billion saying, “it can give you idea of what potential India can unleash.”
“We have to make sure that growth remains inclusive and is sustained. Growth has to make people’s life better in tangible way,” he said adding growth cannot be measured in GDP figures and bottomline of balance sheets.
“In the past eight months, we have worked tirelessly to fulfil the mandate (of the people) — not just to increase our economic growth… Our task is huge and it wont happen overnight. We are conscious of our challenges but also inspired by our successes, ” Modi said.
He said the business sentiments in India were among the strongest among major Asian markets. Consumer confidence has turned positive after three years.
“Growth in 8 core sectors of economy has increased sharply. Inflation is at a 5-year low. 110 million new bank accounts have been opened in last four months. Investments from the US have jumped by 50 per cent in first six months of my government,” he said.
“And I know that some of the pledges made in September in Washington have begun to flow in. Yes, I do keep track of these things,” he said as the audience cheered the remarks.
Prime Minister said the scale of India’s dream was vast and therefore the opportunities it offered were huge.
He said prosperity of India will be an important anchor of stability for the global economy and an engine for its growth. “Above all, a prosperous India will be a force for peace and stability in the world.”
Referring to the cooperation in new areas like civil nuclear and renewable energy and defence equipment, Modi said economies resurgence in both countries gives us greater optimism of future of bilateral ties.
“As the two largest democracies, we have fundamental stake in each other’s success for the sake of our values and shared interest. Working by ourselves, we can still advance our common interest. But, if we work together, we can achieve greater success,” he said.