NEW DELHI -- With India’s seven-phase national elections underway, leaders in the business community hope the next government will finally deliver on promises to cut red tape, encourage innovation and boost economic growth.
Prime Minister Narendra Modi and his Bharatiya Janata Party ran on a business-friendly platform five years ago, sweeping to power and forming the National Democratic Alliance government headed by the BJP. But Modi faces criticism of delivering less than he promised, while the business community wants more reform, faster.
"We definitely expect further progress in the Indian economy and more ease of doing business [under the new government]," Rajesh Mehta, chairman of Bangalore-based Rajesh Exports, told the Nikkei Asian Review. Mehta's gold mining-to-retail giant processes 35% of the yellow metal produced in the world, and in 2015 acquired Switzerland's Valcambi, the world's largest gold refiner.
"There can be fewer hurdles [to businesses] from the government and [the system] can be [more like] developed countries," he added. "There are so many reporting [requirements], so many compliances, hundreds of them, and all that leads to wastage of time."
Modi is seeking a second five-year term in the polls involving 900 million potential voters in a country of 1.3 billion. Voting began on April 11 and will end on May 19, with all ballots to be counted on May 23. Most opinion polls have predicted Modi's government will return to power.
Growth has been relatively strong during his first term and is currently around 7%, but confidence has been shaken by controversial decisions such as the demonetization of high-value bank notes in 2016 and the chaotic rollout of a goods and services tax in 2017.
Innovation, however, has taken off. A national biometric database aimed at providing targeted delivery of government subsidies and benefits now has over a billion people registered. Other programs include Digital India, designed to give digital empowerment of citizens and transfer of governance and services to them on demand; Skill India, which aims to train 400 million people in various skills by 2022; and Start-up India, which is intended to build a strong ecosystem for the growth of startups.
Business demands focus on several areas linked to ease of doing business. India ranked 77th out of 190 countries in this area last year, according to an index complied by the World Bank, an improvement of over 20 places on the previous year.
"One area is contract enforcement and dispute settlement. This is where India needs to improve," said Bidisha Ganguly, chief economist at the Confederation of Indian Industry. "For that judicial reforms are required. We have an overburdened judiciary and cases take a long time."
She also pointed to delays in government payments to the private sector as an issue ripe for reform. "[When] government projects are given to the private sector there is a long delay in payments. These are the things that the next government needs to work on."
Another source of concern is the distressed agriculture sector, a source of popular unrest. Any uptick in rural income leads to higher demand for industrial goods and services. "Infrastructure in agriculture, such as cold storage, has been lagging," Ganguly added. "That needs to be built. The level of irrigation is not that high and that should be targeted, too."
The country's startups, meanwhile, expect "a productive environment" and "hand-holding" for them to flourish under the next government.
"A great favor that a government can do is to be a bit less intrusive because [for] startups it's a very difficult game to be in. There are people who are very enterprising by nature [but are held back because of lack] of logical, sensible policies," said Jaskirat Singh, founder and chief executive of Webrosoft Solutions, an IT services company.
"The business environment in general, not just for startups, is not simple. It takes forever for any compliance to get [completed]. And for startups, we need to get things done fast," he said, adding that if a company gets caught in an inquiry, it becomes a never-ending process.
There is lack of good governance in general and "red tape persists," Singh added. "I'm actually disappointed by the current government. They raised our hopes, but they turned out to be the same. Now, whoever comes to the power, they should work toward good governance."
For example, big corporations like Reliance Industries with a turnover of billions of dollars file the same tax returns as a company with just a few hundred thousand rupees turnover.
"It's a 90-page return and there are so many departments, such as Income Tax Department and [the Registrar of Companies]. I cannot file it myself because it is so complicated and need to hire a company secretary or chartered accountant," Singh said, adding startups must be encouraged as they are crucial for creating jobs.
Amarjeet Singh, co-founder and chief technology officer of energy data analytics company Zenatix, which is now under the Hero Group, agrees.
He expects the election result will install "a government that brings in some sanity and process simplification" for differentiating between genuine startups and the "pseudo companies" that are trying to take advantage of the system.
"Currently, all this comes at a huge amount of additional compliance," he said, adding that he hopes the next government will support startups by giving them "a fair share" of government projects.
Singh declined to reveal which way he intends to vote, but his preference is for a government with a clear majority in parliament.
Modi critics say a coalition would be more effective as a constraint on the extreme views of some Hindu nationalists within the BJP.
Deepak Pareek, founder and chief executive of agritech startup MyCrop Technologies, said that while the current government's Start-Up India initiative talks about promoting the segment, there are issues relating to income tax.
"There is [a] little bit of ease in doing business ... and the government has started taking farmers seriously," he said, adding it is also trying to make crop procurement transparent.
But Pareek expects the next government to do more to help farmers get the "right price" for their produce, and also work toward creating jobs, "which is a big concern but the [current] government is not ready to accept it."
Prateek Sharma, co-founder and chief executive of Nanoclean Global, a startup making devices that filter out air pollution, said he expects the next government to encourage student entrepreneurship.
"Students have fewer liabilities and responsibilities and can pursue entrepreneurship along with their studies. Somehow there's a trend in our nation that students opt for jobs only and don't foresee entrepreneurship," he said, pointing out that the average age of startup founders in India is 28 and needs to be brought down.
The trading community appears to be leaning toward Modi rather than the opposition Indian National Congress Party led by Rahul Ghandi, scion of the ruling 20th century dynasty.
The Confederation of All India Traders, which says it represents about 70 million merchants, expressed satisfaction with the BJP election manifesto released on April 8. Secretary-General Praveen Khandelwal said the party has promised a national policy for retail trade and pension for their social security, among other things.
"They have incorporated many of our [demands] in their manifesto," he told Nikkei, more than the Congress party.
Nikkei staff writer Rosemary Marandi in Mumbai contributed to this story.
