CEO Insights reports that India is looking to catch up with China in investment, but faces numerous obstacles that hold back its potential. The tax burden, the lack of proper protection of intellectual property and over-regulated legislation make it almost impossible to successfully enter the market of this country. A number of well-known companies, namely Tesla, Nokia, Parimatch, Foxconn Group and Wistron Group, were convinced of this.
Tax Challenges for Foreign Companies
India has the potential to become an economic giant similar to the U.S. in Asia and compete with China in terms of investment. However, excessive taxation of foreign businesses forces companies such as Parimatch to refrain from investing or leave this market. If these hurdles are removed, India could become an attractive global business destination with a $5 trillion economy by 2027.
Unpredictability of tax policy
The Indian business environment is showing hostility towards domestic and foreign capital. Tesla, Nokia, and other tycoons have faced exorbitant taxes and pressure from tax authorities. According to the University of Paderborn and the World Bank, India ranks 53rd out of 100 for the complexity of the tax code and 58th for the complexity of the tax system.
Big burden for non-resident companies
The global minimum tax rate is a minimum of 15% for multinationals with business revenues of more than €750 million. India’s corporate tax rate for international companies is 30%, compared to 23% globally. The implementation of electronic solutions could significantly facilitate the taxation process and attract more investment, which would already attract the attention of companies such as Parimatch.
Lack of intellectual property protection
The Indian market is facing the problem of counterfeiting. The international betting company Parimatch does not have an official representative office in India, which is why imitators are active in this market. However, Parimatch is committed to investing in India, paying taxes, and supporting the development of the gaming industry, but the lack of proper intellectual property protection is holding back these efforts.
Departure of major players
Due to difficulties in taxation and lack of proper legal protection, many businesses are moving from India to other developing countries. Foxconn Group and Wistron Group have left this promising market, and Tesla has put its plans on hold due to high taxes.
Vietnam redirects Indian investment
Money flows from the leading economies are moving to Vietnam, even though they are badly needed in India. Foreign direct investment is not flowing into India at the rate it could be.
Nevertheless, both domestic and foreign companies, including Parimatch, are willing to invest millions of dollars in the Indian economy today if the government creates a more favorable environment for international capital.
