India, which has seen significant rise in foreign investment in recent years, needs regulatory changes to enhance investor confidence, a senior executive of a leading global bank said on Monday.
India has captured its share of foreign investment significantly but the billion people-market has the potential of winning more investment in the coming years, said Ravi Manchanda, the Managing Director at Standard Chartered Bank in Singapore, with responsibilities for development investment opportunities in the Indian market.
As such, an immediate challenge for India is to improve its standing on the Ease of Doing Business Index which would raise investor confidence in India, Manchanda told PTI.
The EDBI, a World Bank initiative which measures the efficiency with which business can be conducted in different countries, rates India at 133rd out of 183 countries studied recently.
Comparatively, Indias business competitor, China is rated 89th. "With all the recent hype on India's and China's amazing race to development, there has not been enough talk on the structural and regulatory changes that need to be made in the two economies," he pointed out with a special emphasis on India, which faces of challenge of maintaining high economic growth rates.
"India is constantly competing with China to become the largest emerging market in the world," Manchanda said.
But for India to match China, Manchanda believed India has to make major improvements in measures, such as enforcing contracts period to be reduced to 406 days from 1,420 days, reducing the number of procedures to 34 from 46 and cutting costs to 11 per cent from 39.6 per cent as of now.
This would lift India's rating on EDBI at 113, and put it closer to China.
Manchanda said that FDI is critical for India's annual double-digit economic growth, and says international investment is being competed for by emerging economies like Brazil and Russia as well as economies that are being re-built including Argentina.
"India has become an acknowledged emerging market but we can expect more options for investors from newly emerging markets, offering incentive-based opportunities," he said.
The EDBI is a good guide and India could draw more investments from abroad with benefits far outweighing the cost of minimum action required to remedy this, he said. Foreign direct investment into India has been increasing steadily with 2006-2007 seeing the highest growth of over 150 per cent.
India has received FDI with a cumulative worth of approximately $137 billion over the last 10 years.
China, he said, received the same amount of FDI in the last two years.
