Bureaucracy stalls investments!

The fact that India continues to rank poorly as an investment destination in the newly released 10th annual survey of petroleum sector executives around the world carried out by a prestigious non-profit global institute is probably as good a time as any for some serious self introspection. The survey identifies countries with the greatest barriers to investments in the oil and gas industry and is confined to the oil and gas executives in the upstream sector. India is placed 30th among 36 countries with “medium reserve holdings” in terms of policy perception in the global survey. Thailand, Malaysia, Vietnam, and even Pakistan, come before India. Among Asian countries included in the survey, India is in the absolute bottom. Only Bangladesh ranks below us. Among 100 countries overall, India is placed at 80. Why is the general perception on India so poor? The survey quotes one of the respondents as saying, “Getting environmental clearance can be a prolonged process. Even after getting environmental permission, there can be nasty surprises.” The fiscal terms in India are considered to be a big deterrent but it is a lower deterrent in Pakistan. Fiscal terms are seen to be as big a deterrent in China as they are in India.  Then again, India’s taxation burden is seen to be considerably larger than Pakistan but China’s burden is seen as much higher. Then how does China get a higher score than India? China’s environmental licensing norms are seen to be much less cumbersome. There are also more respondents not wanting to invest in India than in China or Pakistan as a result of uncertainties in interpretation and implementation of policies. The cost of regulatory compliance too is seen to be much higher in India. Surprisingly, we are less of a deterrent on labour regulations than China or Pakistan and we are higher up the ladder on this count than quite a few countries. India is higher on infrastructure, labour availability and skills but ranks lower in terms of our quality of geological database.  We are also ahead of others in terms of political stability despite our fractious politics.

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