June 8, 2023

Great Indian Mutiny

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India big bet | Comment

With a population of 1,292 million, India is one of the three fastest growing markets in the world, next to China, accounting for 7.1% of world GDP.

India is undergoing the most dynamic supply side unrestricted market reforms in a generation. The Modi government is not only privatizing state-owned enterprises, but is also reviewing taxes, easing foreign direct investment rules and deregulating agriculture and labor markets.

The Indian Parliament recently voted to repeal the preemptive tax, which provides a favorable and predictable environment for capital accumulation for foreign investors.

The infamous hardline unions in India have been punished by labor reforms; Now they have to issue two months notice before the strike and companies need less government approvals to reassign employees. In addition, India further reduced business costs by reducing taxes for start-ups by 25% to 15% and for established companies by 30% to 22%.

In August, Finance Minister Nirmala Sitharaman announced an ambitious plan to lease out state property, including 42,300 km of power lines, 26,700 km of roads, 8,200 km of pipelines and 400 railway stations. Asset monetization is expected to raise $ 80 billion or 3% of India’s GDP.

India has a growing foreign interest in its digital economy. According to Bloomberg, Facebook (now meta), Qualcomm and Intel have invested about $ 16 billion in digital services through Reliance Industries Limited, India’s largest telecommunications retailer. And Google alone has signaled that it will invest $ 10 billion to accelerate digitization through its CEO Sundar Pichai (of Indian descent): “We will do so through capital investment, partnerships and operations, infrastructure and ecosystem investments. It is a reflection of our confidence in the future of India and its digital economy.

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Does this development in India benefit us in LATAM? For example, if a design company in Latin America goes digital and starts exporting its services, its competitors will be more demanding, professional and ready, providing more support and at a completely lower cost. The question is, how does that design company compete with someone from India?