Corruption in india a pain point for Foreign investors says Kroll

Vastavam web: Foreign investors are still looking at corruption as a major challenge when it comes to making investment decision in India and also see ‘evolving’ corporate governance and risks to security of assets as other pain points, says US risk management firm Kroll.After a stable government came to power in 2014, global investors were expecting significant changes in the way businesses used to happen in India but things have not turned out as expected, the New York-based risk consultancy noted.Asked whether there has been a decline in terms of risks associated with India after the Narendra Modi government took charge of office, Kroll managing director Tarun Bhatia answered in the affirmative but added a word of caution that more could have been done.

“As the current government got voted in and based on the promises made, global investors were expecting a material change in how business is done in India. Unfortunately that hasn’t happened to the extent anticipated. Multiple reforms have been introduced which signal strong intent of the government. However, they haven’t been tested yet,” Bhatia told.Bhatia further noted that the government seems very determined to address issues related to ease of doing business in India and steps like demonetisation, introduction of GST, etc are expected to influence the supply chain, push digitisation and make businesses easy to operate.

According to Kroll’s global fraud report released earlier this year, almost 20 per cent of investors/companies were dissuaded from doing business in India due to corruption, ‘evolving’ corporate governance environment and risks to security of assets risks.Meanwhile, India has jumped 30 places to rank 100th in the World Bank’s ‘ease of doing business’ ranking and global credit rating company Moody s Investors Service also upgraded India’s sovereign rating by a notch and changed the outlook from stable to positive.However, everyone was not convinced and another global ratings major Standard & Poor’s kept its sovereign rating for the country unchanged at the lowest investment grade of ‘BBB- minus’ citing high government debt and low income levels.

According to Kroll, some of the factors that help to attract foreign investors’ interest to India include relative high growth opportunity as compared to other developed and developing markets; stable government at the centre and a high likelihood for it to continue in the medium term.Going ahead, beyond the much talked about land, labour and tax reforms, some of the areas which need immediate attention include education, as India is losing out to South East Asian and East European countries due to a weak and stalled education system, he said.Moreover, India has a multiple regulator regime and its judiciary needs to have a process where there is faster resolution and greater accountability.