Sweden now cautiously optimistic about business climate in India

The euphoria generated amongst global investors when Prime Minister Narendra Modi came to power in 2014 has now diminished to a “more normal” outlook with doubts creeping in following the failure to pass the crucial Goods and Services Tax (GST) and Land Acquisition Bills, and lack of urgency in pushing infrastructure projects.

At a three-day conference organised by India Unlimited, a platform initiated by the Indian embassy in Stockholm and Gothenburg, Sweden, the pet themes of Prime Minister Narendra Modi, such as Make in India, Digital India, Reimagining India and Skill India, were the focus of discussions among Indian government representatives, led by Banashri Bose Harrison, India’s Ambassador to Sweden and Latvia, and a host of Swedish entrepreneurs, big business heads, government officials and leaders.

This was the third annual edition of India Unlimited, the platform assiduously nurtured by the Indian Ambassador with its creator, Sanjoo Malhotra, an independent Indian professional based in Sweden.

There are about 800 Swedish companies doing business in India every year. They have created 150,000 direct and 1,000,000 indirect jobs in India.

“The saturation in most economies is a sharp contrast to the growth curve in India… Our effort as India’s representatives here is to facilitate the interface and encourage honest dialogue,” said Banashri Bose Harrison.

Alkesh Kumar Sharma, CEO and Managing Director of the Delhi Mumbai Industrial Corridor Development Corporation, talked about premier industrial townships being developed as a global manufacturing and investment destination supported by smart infrastructure and enabling policy framework.

The enthusiasm of the Indian delegation was met with characteristic pragmatism by the Swedish side. Participants in a roundtable on defence and security discussed foreign direct investment (FDI) in the defence industry. According to a number of participants, GST was at the heart of planning any such move.

At another seminar, enthusiasm about India was mixed with caution.

Anna Lindberg, Trade Commissioner to India as well as Head of Business Sweden, and her colleague Lisa Tullus, Project Manager Sweden India Smart Cities Platform, made a presentation titled ‘A trend shift after the Modi Government turned to more realistic levels in 2015’.

According to a survey conducted by Business Sweden, the Indian business climate was considered favourable by 16 per cent of the companies in Sweden in 2013. This rose to a staggering 60 per cent in 2014 after Modi was sworn in to power. In 2015, it came down to 52 per cent and the trend follows in 2016. Similarly, future investment climate in India was considered favourable by 52 per cent of the companies in Sweden in 2013. This dramatically went up to 90 per cent in 2014 after Modi’s decisive victory. In 2015, it came down to what Lisa Tullus described as a “more normal” 72 per cent, which is still a very high percentage of companies that view India as a good investment destination.

Among the main challenges identified by the companies, besides the bureaucracy and red tape, bribery and corruption, the Swedish companies recognise competition too as a major issue. “The companies are looking at adoption of the Goods and Services Tax, push for infrastructure improvement and land acquisition reforms as the key reforms to help invest in India,” said Lisa Tullus.