India just entered its “budget season” with a flurry of reports on its economy and fiscal priorities for the coming year. While these rosy reports contain positive rhetoric about India’s economic and commercial environment, global manufacturers are looking for action: concrete steps, not just rhetoric, to address challenges that limit their access in India.
The past few weeks have seen a series of reports that lay out the Indian government’s plans for everything from rural development to trade. In late February, Finance Minister Arun Jaitley offered India’s economic survey and annual budget, projecting the economy to grow by 7.0-7.5 percent in 2016-2017 and plans for economic management. The same week, a new report from a government-established expert committee recommended changes to government approvals that impede business in India.
On paper, these documents seem positive, with statements that, if implemented, would tackle the concerns of manufacturers in the United States. Key themes include barriers to investment entry and exit, efforts to improve the “ease of doing business,” work to reduce government approvals and align with international standards, tax and bankruptcy reforms and trade policy issues, such as India’s views of tariffs, subsidies, the World Trade Organization and the Trans-Pacific Partnership.
The reality, however, shows little change: neither the economic survey nor the experts’ report contain binding legislation to implement proposed changes. The budget included only general commitments on key laws, with specific changes largely limited in scope. In addition, the budget still requires full passage in India’s parliament.
With global challenges limiting economic growth—and with both sides considering how to approach the relationship in 2016—it is even more crucial that India makes real changes to its policy and commercial environment, from eliminating discriminatory trade and investment rules to modernizing its intellectual property regime. Only through true reforms that spur growth for domestic and global manufacturers can India realize the promise laid out by U.S. and Indian leaders to build a robust trading relationship.