It’s going to take more than low corporate taxes to lure investors to India.
Rigid land and labor laws and protectionist trade policies are hindering investment in India even though the government has made strides in improving the ease of doing business, according to the World Bank.
“What inhibits are restrictive regulations which affect its land, labor, logistics and also its policies which affect trade and goods and services,” said Aaditya Mattoo, an economist with the World Bank and co-author of the World Development Report 2020 on global value chains. That’s why the production that has relocated from China due to the trade war “has not gravitated toward India,” he said in New Delhi on Tuesday.
India jumped 14 places to 63rd in the World Bank’s latest rankings on ease of doing business, but logistics costs are still three times higher in India than in China and two times higher than in Bangladesh. With its 1.3 billion people, India is the biggest consumer market in Asia after China, yet businesses are overlooking India in favor of manufacturing powerhouses like Vietnam amid the trade war.
Companies operating in India have little flexibility in hiring and firing workers, while acquiring land is not easy. The labor laws are something Prime Minister Narendra Modi wants to address in new legislation as he ramps up reforms to bolster a slowing economy.
Mattoo said the trade war is weighing on growth prospects, and if increased global policy uncertainty curbs investment, India’s income and exports would both decline by about 1 percentage point.
“There is a real risk that India could end up suffering from these trade tensions,” he said. “The current tensions might thrust another 7 million people in India into poverty because of reduced investments globally and slowing trade growth.”
India ranks 73rd in UN index assessing e-commerce readiness
The United Nations Conference on Trade and Development’s Business-to-Consumer (B2C) E-commerce Index 2019 has been topped by the Netherlands for the second consecutive year. The index scores 152 nations on their readiness for online shopping, wort…
e-commerce-bccl3.jpg.webpThe United Nations Conference on Trade and Development’s Business-to-Consumer (B2C) E-commerce Index 2019 has been topped by the Netherlands for the second consecutive year.
European nations hold eight of the top 10 spots on the index, which ranks 152 countries on their readiness to engage in online commerce. The only non-European countries on the top 10 list are Singapore (3) and Australia (10).
The index scores 152 nations on their readiness for online shopping, worth an estimated USD 3.9 trillion globally in 2017, up 22 per cent from the previous year.
India is ranked 73rd in the 2019 index, slightly improving its position from 80 in 2018 and 83 in 2017. According to the report, in India Internet shoppers as a share of Internet users was 11 per cent and Internet shoppers as a share of population 3 per cent in 2017.
Faring better than India are countries such as Iran, ranked 42nd, Kazakhstan (57), Azerbaijan (62), Vietnam (64) and Tunisia (70). Switzerland is ranked second on the list, followed by Singapore, Finland, the United Kingdom, Denmark, Norway, Ireland, Germany and Australia.
Countries are scored on the access to secure internet servers, the reliability of postal services and infrastructure, and the portion of their population that uses the internet and has an account with a financial institution or mobile-money-service provider.
The 10 developing countries with the highest scores are all from Asia and classified as high-income or upper middle-income economies. At the other end of the spectrum, least developed countries occupy 18 of the 20 bottom positions.
Out of the 20 economies with the lowest value in the 2019 index, 18 are Least Developed Countries, with Congo and Syria being the only non-LDCs in this group. Comoros, Burundi, Chad and Niger are last in the index.
“Our B2C index shows how real and worrying the digital gap is between developed and developing countries,” director of UNCTAD’s unit that prepares the annual index, Shamika Sirimanne said.
For example, in half a dozen European nations, more than 80 per cent of internet users make purchases online. But that proportion is below 10 per cent in most low and lower middle-income countries.
“There is an urgent need to help less prepared countries improve their infrastructure and build trust among their population,” Sirimanne said.
“Otherwise, their businesses and people will miss out on the opportunities offered by the digital economy, and they will be less prepared to deal with various challenges.”
UNCTAD’s index also highlights the need to improve the reliability and availability of statistics, especially in developing countries. For example, internet user data for 2018 were available for less than half of the countries at the time of index calculations. And the latest data on bank and mobile-money accounts are from 2017.
“Typically, countries that are the least prepared for the digital economy also have the least amount of statistical information to help their policymakers make well-informed decisions,” Sirimanne said.
“E-commerce allows consumers to benefit from greater choices and lower prices,” it said.
In 2017, an estimated 1.3 billion people, or one quarter of the world’s population aged 15 years and older, shopped online. This represented a 12 per cent increase over 2016. The share of Internet users that are shopping online is much lower in countries at low levels of income, pointing to the importance of enhancing the e-commerce readiness not only with regard to Internet connectivity but also in other areas, the report added.
via Narendra Modi: India still has long way to go on reforms, says World Bank – The Economic Times
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