Swedish businesses confident about investments in India, says Ann Linde
3 min read 22 May 2017, 11:34 AM ISTIn New Delhi for the India-Sweden joint commission meet, Swedish trade minister Ann Linde, expressed concern over the absence of a bilateral trade and investment pact
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New Delhi: Swedish trade minister Ann Linde has said that Swedish businesses are confident about investment prospects in the Indian market. In New Delhi last week for the India-Sweden joint commission meet, which she co chairs with Indian commerce minister Nirmala Sitharaman, Linde, however, expressed concern over the absence of a bilateral trade and investment pact as well as one at the European level which she said could dampen investor sentiment.
Edited excerpts from an interview:
What were the issues or impediments of business in India highlighted during the joint commission meeting you had with Indian commerce minister Nirmala Sitharaman?
I think there are great possibilities to do business in India and that is also something that the Swedish government will really like to promote and I think the fact that there was a joint meeting between Prime Minister of Sweden Stefan Lofven and Prime Minister Narendra Modi has emphasised how important this is. There are also some challenges that we have seen in the Business Climate Survey (in India released on 18 May) and I think my counterpart, minister Nirmala Sitharaman, was very willing to listen to what our companies have to say because that gives a kind of reality check—what do the (Swedish) companies really see as challenges in working in India.
So what are these challenges?
Ikea, for example. Of their main challenges is labelling and that is because there are different rules in different states on how you should label things. And it is also an issue that you should have to label each different product. There is also the problem of taxes where there are different taxes layering on each other. Some companies have to pay 45% in taxes. There is also the issue of bureaucracy and corruption. So I think that in India as in any other country there is the possibility of improving the business climate. The issues of taxes are what companies in Sweden would also raise.
India has moved up some places in the ease of doing business index. Do Swedish companies find that it is easier to do business in India?
Well in our Business Climate Survey, eight out of 10 companies invested what they were planning to or more than they intended to in India in 2016. And 8 out of 10 say they will increase their investment. At least 3 out of 4 companies consider the Indian investment climate favourable. And 3 out of 4 said the plan of the government of India to implement the Goods and Services Tax has contributed positively to make an impact on the business climate. Almost 65% of Swedish companies are satisfied with the business climate.
The India European Union trade agreement is taking a long time to come to fruition. How is this impacting trade and investment ties between India and the EU?
I think the agreement is very important. The free trade agreement with South Korea that was finalised two weeks ago has actually increased the exports from EU to South Korea by 50%. Just some days ago, the Free Trade Agreement between the EU and Canada was ratified and it will go for provisional application in June. For textile companies, for example, it is a great opportunity. The tariffs on shirts, for example, in Sweden came down by 18%. I think it will be a great opportunity for India and the EU to complete the Free Trade Agreement. I think it will be really good for business and exports. But there needs to be a strong will from both sides. Both from India and the EU. From the EU side there is the will.
India has decided to terminate all bilateral investment protection agreements. Was there one with Sweden too?
Yes, that has also been terminated.
What is your view on this?
Well actually, for the long term it has to be one pact (with all EU countries) between the EU and India because EU has the responsibility for all trade activities between each member country and other countries. What we think is that it is worrying that all the bilateral investment protection agreements have been cancelled by India and there is still no investment security between the EU and India. That will leave companies with no security for their investment. And I am not sure that it will not be a negative factor for investment in India because you want security for your investments otherwise you don’t invest. If companies don’t feel that their investments are secure, of course they will think twice.
