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Corporate tax rate cut is good for foreign investors seeking to invest in India but what matters more is long-term stability in policies and is the decisive factor for most, said Ibrahim Baylan, Swedish Minister for Business, Industry and Innovation.
An India-EU Free Trade Agreement (FTA), which has been in the works for some time, will be beneficial for both India and Sweden especially because of the increasing uncertainty in the world trade order, Baylan said in an interaction with BusinessLine .
Responding to Finance Minister Nirmala Sitharaman’s comment at a joint-industry meeting that the recent coroporate tax rate cut in India would play an important role in attracting foreign investors, Baylan said a more positive development would be the policy stability that investors are seeking.
“In a world where there is more and more uncertainty from global trade system, corporate tax cut is important but not the only reason why they would establish business in the country. A more positive development would be long-term stability in policy,” he said.
The Minister is in India as part of a delegation led by Sweden’s King Carl XVI Gustaf. The King, who is accompanied by Queen Silvia, is on a five-day visit to India and will be also visiting Mumbai and Uttarakhand. Major Swedish companies such as Ikea and Ericsson are part of the business delegation.
Baylan admitted that although both sides were putting in a lot of effort to increase trade and cooperation, a lot more needs to be done as bilateral trade had not increased as fast as both sides would like to. In 2018-19, the two-way trade was around $2.4 billion.
“We have to increase our trade and investments. This was one of the themes (of discussions). We have the understanding. We also have established the innovation partnership. But we do need to see more results,” he said.
Enhance cooperation
Baylan, who met both Prime Minister Narendra Modi and Commerce and Industry Minister Piyush Goyal, said that the two sides had good discussions on how to enable industry and private sector to enhance cooperation to create more pilot tests and new industries.
The two sides decided to focus on joint innovation in areas such as digital health, artificial intelligence (AI), future mobility and circular economy.
FTA negotiations
On the on-going negotiations between India and the EU on a bilateral FTA, Baylan said the fact that India also had its rural communities to consider could not be ignored. “We are in different situations which has to be recognised. I understand that you want an FTA that also works in India,” the Minister said, adding that if such a pact could be negotiated it would benefit both countries especially because of the shedding of rule-based order in world trade.
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