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On Monday, it is Budget Day here in India, and business leaders will be | :00:07. | :00:12. | |
watching carefully for any announcements which could help them. | :00:13. | :00:17. | |
This is a country which is notoriously difficult to operate in. | :00:18. | :00:21. | |
Has the Narendra Modi government delivered on its promise to make | :00:22. | :00:29. | |
things easier? That is what we are discussing on this week's Talking | :00:30. | :00:33. | |
Business. Welcome to Talking Business in | :00:34. | :00:59. | |
Delhi. I am Yogita Limaye. India is renowned for its red tape. It takes | :01:00. | :01:04. | |
an average of 29 days to open a company and firms have to comply | :01:05. | :01:07. | |
with 33 different tax procedures. Then they have to deal with 29 | :01:08. | :01:13. | |
different states all with different rules on land purchase, employment | :01:14. | :01:21. | |
and the environment. But things do seem to be improving slightly. In | :01:22. | :01:23. | |
2014 India was ranked 142 in the ease of doing business index. By | :01:24. | :01:30. | |
2015 it had moved up 12 places. There is still a long way to go but | :01:31. | :01:39. | |
have things become easier? We have a panel of experts. One of the leading | :01:40. | :01:47. | |
media platforms, the managing director of a pharmacy firm and the | :01:48. | :01:53. | |
managing director of Dixon technologies which has some of the | :01:54. | :01:57. | |
contracts with some of the best known technology firms across the | :01:58. | :02:00. | |
world. Right at the outset, I'm going to ask you have it become | :02:01. | :02:06. | |
easier to do business in India? Entrepreneurship has become a matter | :02:07. | :02:08. | |
of pride. If you months ago people | :02:09. | :02:33. | |
would wonder that probably these boys could not get a job, that is | :02:34. | :02:36. | |
why they are making a company. Now people from the top colleges are | :02:37. | :02:39. | |
starting companies. That is the big change which has happened. India was | :02:40. | :02:42. | |
of a complex place to do business in. We have and added a huge number | :02:43. | :02:45. | |
of rules. A lot of that dismantling has started happening and India has | :02:46. | :02:48. | |
definitely become a far easier place but this is definitely still a work | :02:49. | :02:51. | |
in progress. I have seen the winds change and I'm sure things will | :02:52. | :02:56. | |
change a lot more. 2014 was not the best period to run a business but | :02:57. | :02:58. | |
the winds of change are coming now. This, once | :02:59. | :03:28. | |
they come to the ground level, will make a lot of difference to this | :03:29. | :03:30. | |
country. If you talk about our sector which we recently got into, | :03:31. | :03:32. | |
India is one of the fastest-growing markets for smartphones in the | :03:33. | :03:35. | |
world. We consume almost 17 million phones a month. In the coming years | :03:36. | :03:38. | |
we will be manufacturing 70% of what they can do in India. This tells you | :03:39. | :03:40. | |
about the change that is happening in the country. You are the man | :03:41. | :03:43. | |
behind the make in India and start-up campaigns, what is the one | :03:44. | :03:46. | |
biggest difference this government has made since it came to power? The | :03:47. | :03:52. | |
government is clear that Indian entrepreneurs must be allowed to | :03:53. | :03:57. | |
fly. We must make India one of the easiest places and simplest places | :03:58. | :04:00. | |
to do business. This would mean that you just as Mantel a lot of | :04:01. | :04:06. | |
procedure, rules and regulations down the line and from the 1st of | :04:07. | :04:10. | |
April, we will be putting out a mobile app which will allow all | :04:11. | :04:14. | |
smart ups to do their registration in just one single day, across five | :04:15. | :04:19. | |
different departments through this mobile app. I think the government | :04:20. | :04:25. | |
is broke clear that Indian start-ups must grow and flourish. As we go | :04:26. | :04:30. | |
along, this would mean that departments across sectors must | :04:31. | :04:34. | |
become simpler, they must convert, they must integrate, they must work | :04:35. | :04:38. | |
together, to ensure the entrepreneurship of India will grow. | :04:39. | :04:44. | |
You said you have seen the winds of change but you have not really seen | :04:45. | :04:48. | |
change on the ground as yet, what are the difficulties you face? Today | :04:49. | :04:56. | |
for example, if I upload a tax form, sometimes uploading does not take | :04:57. | :05:00. | |
place, sometimes there are problems. There is still the contact between | :05:01. | :05:04. | |
the person who has uploaded the form and the tax office. I'm not just | :05:05. | :05:10. | |
talking about the tax, if a notice is served online, the responses go | :05:11. | :05:20. | |
online to the department concerned, so it becomes a response which is | :05:21. | :05:25. | |
not answered by one ticket a person. It is not a visibility factor, it | :05:26. | :05:29. | |
becomes a clear-cut answer you giving. There is not one person who | :05:30. | :05:33. | |
will take care of your case, and then there is corruption. That | :05:34. | :05:36. | |
corruption at grassroots level has two disappear for a country to | :05:37. | :05:43. | |
become a smooth place to work. One of the findings of the World Bank is | :05:44. | :05:47. | |
in India you have to comply with 33 different tax procedures, how big a | :05:48. | :05:51. | |
difficulty is that? No doubt it is difficult for someone | :05:52. | :05:57. | |
to understand India's tax structure, it is very complex. But I think that | :05:58. | :06:03. | |
will change now. We have the goods and services tax coming in so that | :06:04. | :06:06. | |
will take weight factors which are in the system right now. You have | :06:07. | :06:12. | |
talked about how there are several start-ups which started up here and | :06:13. | :06:16. | |
moved away. Your company has chosen to remain. Why have start-ups moved | :06:17. | :06:25. | |
out of India? I think traditionally raising capital as an Indian company | :06:26. | :06:28. | |
was quite cumbersome. I don't think it has eased yet, but what has | :06:29. | :06:33. | |
changed is because the whole perception of India has changed, I | :06:34. | :06:36. | |
just came back from a trip abroad where I met a lot of investors, | :06:37. | :06:42. | |
large global pension funds etc, and there is so much euphoria, positive | :06:43. | :06:49. | |
euphoria around India that now investors don't bother whether you | :06:50. | :06:53. | |
are a Singaporean corporate Indian company or an Indian incorporated | :06:54. | :06:59. | |
company because they want to be part of the story. India is a very large | :07:00. | :07:04. | |
country. It is bigger than 24 countries of Europe. You have to | :07:05. | :07:10. | |
work in partnership with the states. Much of the action in reality is | :07:11. | :07:16. | |
shifted to the States. How do you meet the states' change. Every | :07:17. | :07:22. | |
single state of India, whether it is good to rats or tunnel now do, they | :07:23. | :07:25. | |
are all becoming simpler places to do business. -- which are wrapped. | :07:26. | :07:33. | |
When you start a large company, the mindsets have changed that higher | :07:34. | :07:37. | |
levels and the tripping down effect has started. It will take another | :07:38. | :07:42. | |
two to three years to spread this whole revolutionary change. We are | :07:43. | :07:47. | |
in this climate of global economic gloom and India is seen as a bright | :07:48. | :07:52. | |
spot, you think if it takes long to get all of these things actually | :07:53. | :07:56. | |
moving, that it will lose the great opportunity it has at the moment? I | :07:57. | :08:01. | |
think over the next five years, India will emerge as a global hub | :08:02. | :08:06. | |
for manufacturing, not only for India but for exporting to the | :08:07. | :08:16. | |
world. What we are lacking today is an ecosystem because we import a lot | :08:17. | :08:21. | |
of components from China. If you are importing your components, the | :08:22. | :08:23. | |
question is, why is there are not a strong robust component ecosystem in | :08:24. | :08:27. | |
place? I think one of the reasons is it is very difficult for a new | :08:28. | :08:29. | |
entrepreneur to come in and start a business, because of the | :08:30. | :08:53. | |
huge acquisition of land building. If someone was to set up a factory | :08:54. | :08:56. | |
of 300 square feet, it would cost around two to set it up. We don't | :08:57. | :08:59. | |
expect a new entrepreneur to come in and put in that kind of capital. You | :09:00. | :09:02. | |
have seen a lot of tech start-ups. How many are in the manufacturing | :09:03. | :09:04. | |
space where people have put together a man of factoring facility? We have | :09:05. | :09:09. | |
seen a huge number of incubation centres and creating research parks | :09:10. | :09:12. | |
all over the country so students become the innovators of tomorrow | :09:13. | :09:17. | |
and that in my mind is the industrial Academy linkage and | :09:18. | :09:21. | |
bringing that into sharp play in the days to come. Is that what you are | :09:22. | :09:24. | |
seeing when you see young entrepreneurs of today, are they | :09:25. | :09:28. | |
veering towards a tech start-up which might be simpler in our | :09:29. | :09:37. | |
country than in manufacturing? No start-up is simple. I don't agree it | :09:38. | :09:40. | |
is only tech where we are seeing entrepreneurial spirit. I'm seeing | :09:41. | :09:45. | |
many companies in the area of robotics, consumer packaged goods | :09:46. | :09:48. | |
etc where manufacturing is starting in India. The entrepreneurs feel | :09:49. | :09:52. | |
there is a great competitive advantage because we are technology | :09:53. | :10:00. | |
first into manufacturing, so they're not thinking only about importing | :10:01. | :10:02. | |
machines, they are thinking about innovating and manufacturing. You | :10:03. | :10:05. | |
mentioned the goods and services tax. The government set a deadline | :10:06. | :10:11. | |
of 1st of April this year for it to roll out. The bill has not cleared | :10:12. | :10:15. | |
Parliament so it does not look like that deadline is something they will | :10:16. | :10:19. | |
meet. If that is appointing for you? The number of taxes we have to pay | :10:20. | :10:25. | |
and the funds, you have consultants for practically every taxed or you | :10:26. | :10:29. | |
have in place. You need to cut out all that. You need to make it into a | :10:30. | :10:33. | |
simple form and we are waiting for that to happen. Right now, some | :10:34. | :10:42. | |
states have very arbitrary taxation for goods coming into the state. A | :10:43. | :10:50. | |
seller in a particular area, say Gujerat wants to sell something to | :10:51. | :10:55. | |
Kerala, that needs to go away so there is free and fair commerce | :10:56. | :11:01. | |
between all the states. We have talked about bureaucracy and red | :11:02. | :11:04. | |
tape, we are also going to talk about the other things which this is | :11:05. | :11:11. | |
Miss needs to flourish. -- businesses need to flourish. First, | :11:12. | :11:16. | |
this is a look at what businesses need from government. | :11:17. | :11:31. | |
Promising a business friendly environment, for once I would like | :11:32. | :11:34. | |
to see a politician get tough on business and the causes of business, | :11:35. | :11:36. | |
but that will never happen. Has one set of promises been kept? India | :11:37. | :11:39. | |
became the fastest growing big economy in the world. India has vast | :11:40. | :11:45. | |
untapped potential. If it goes according to plan, it will be | :11:46. | :11:48. | |
growing at upwards of 5% out to 2050. Is this Prime Minister | :11:49. | :11:56. | |
Narendra Modi's doing? He has been travelling the world asking large | :11:57. | :12:02. | |
companies to come and make in India. The government has launched | :12:03. | :12:07. | |
initiatives such as making India to stimulate investment and | :12:08. | :12:11. | |
manufacturing. But how can we hold politicians to their promises or | :12:12. | :12:16. | |
measured them. If it was a business promise you might ask businesses to | :12:17. | :12:27. | |
do a pipeline calculation. You might say we have this calculation and the | :12:28. | :12:30. | |
value is this. In theory, you could do the same with business promises. | :12:31. | :12:36. | |
But that presupposes that politicians have any influence on | :12:37. | :12:40. | |
what happens in business. Streamlining is the name of the | :12:41. | :12:48. | |
game. Lets come at it from another angle. If you could stretch of | :12:49. | :12:57. | |
imagination and imagine that I am a successful businessman, what is it | :12:58. | :13:00. | |
you would want to make a business friendly environment? Business | :13:01. | :13:02. | |
leaders want the same thing. They want stability and policy, they want | :13:03. | :13:05. | |
stability in what to expect from the politicians. They want to know that | :13:06. | :13:10. | |
if they have not told that tax rates will be stable or will be | :13:11. | :13:17. | |
increasing, that that will happen. They want stability in the | :13:18. | :13:20. | |
macroeconomy environment. To make it easy on the politicians, let's do it | :13:21. | :13:30. | |
in a language they understand, slogans and acronyms since. Thrive | :13:31. | :13:35. | |
is an acronym to make me feel welcome in a business environment. | :13:36. | :13:41. | |
The T stands for taxes. H for hidden or stop hide your low taxes. We had | :13:42. | :13:50. | |
a lot of complicated but OK arrangements. R is for relax it. I | :13:51. | :13:55. | |
is for investment, invest in the infrastructure that will bring the | :13:56. | :13:59. | |
great jobs to your country a little bit easier. At the airport, why | :14:00. | :14:05. | |
can't my plane land very near to where my taxi takes off? V is for | :14:06. | :14:10. | |
visa. Don't make it so hard for me to get one. | :14:11. | :14:23. | |
Finally, e-fit for exit strategy. If things do not work out, don't | :14:24. | :14:35. | |
make it hard This will radically change this. It | :14:36. | :19:13. | |
will bring down the costs to one tenth of what it was. We import | :19:14. | :19:23. | |
components from China will stop the cost has come down from 1500 to we | :19:24. | :19:31. | |
will bring the container from purport to my factory. It costs me | :19:32. | :19:38. | |
almost $2000. I have to bring the container in and export the product. | :19:39. | :19:45. | |
Another $2000 to the cost. How can I compete if I have to pay that kind | :19:46. | :19:52. | |
of cost? You cannot open a newspaper in India without reading about | :19:53. | :19:56. | |
millions of dollars of investment coming into Indian start-ups. Is it | :19:57. | :20:04. | |
easy to get funding? 3 billion, $4 billion came into start-ups. The | :20:05. | :20:08. | |
trend will only move in the right direction. The big reason for that, | :20:09. | :20:15. | |
we will have a billion internet users in the near future. Every | :20:16. | :20:19. | |
investor in the world wants access to companies that are solving | :20:20. | :20:24. | |
problems profitably for these billion internet users. We are the | :20:25. | :20:30. | |
largest large front here in the world. In India, financial charges | :20:31. | :20:40. | |
are really high. We need to work on that. If I am competing with a | :20:41. | :20:44. | |
company that is working on LIBOR wrote all over the world, and I am | :20:45. | :20:52. | |
paying an additional 6%, 7%, something is going on. One simple | :20:53. | :20:56. | |
example, one year we went through massive loss. Even our company went | :20:57. | :21:03. | |
into a loss. That year, the turnover of my company was around 20 million | :21:04. | :21:10. | |
US. The financial charges I paid 20 million US. I am justified in what I | :21:11. | :21:19. | |
am saying. I paid to the bank much more. It was loss-making, that year | :21:20. | :21:26. | |
was loss-making. I paid a lot more. I would say to the people who are | :21:27. | :21:31. | |
exporting, there is a level playing field for the two companies who are | :21:32. | :21:34. | |
manufacturing in India for India, there is a bit of a problem. We | :21:35. | :21:44. | |
supply boxes. When we are giving them credit, we are borrowing at a | :21:45. | :21:51. | |
much higher cost. In China and any other country, they are paying in | :21:52. | :21:54. | |
dollars. One solution is the banks must offer the buyers credit in US | :21:55. | :22:01. | |
dollars to all the companies. Very few companies have access to the | :22:02. | :22:05. | |
facility right now. Is that something the Government can help | :22:06. | :22:11. | |
with? The Government is constantly looks at policy measures. In the | :22:12. | :22:16. | |
electronics sector, we have taken a number of currency measures. We must | :22:17. | :22:21. | |
understand that India is part of a globalised world, an integral part | :22:22. | :22:28. | |
of a globalised supply chain. I's manufacturing must become extremely | :22:29. | :22:36. | |
cost competitive. -- India. Total productivity must rise you cannot | :22:37. | :22:42. | |
keep subsidising this. On that note, thank you for joining us. That | :22:43. | :22:48. | |
brings us to the end of this edition from daily and indeed the series. We | :22:49. | :22:54. | |
will be back soon. Bye-bye. -- from Delhi. | :22:55. | :23:00. | |
Time to talk about the weather. A cloudy day across the UK. A | :23:01. | :23:07. | |
beautiful day in the | :23:08. | :23:08. |