India Inc to policymakers: shape up, or we'll ship out
By Sumeet Chatterjee and Aradhana Aravindan
MUMBAI (Reuters) - After the rapid slide in India's rupee this year, the message from the country's corporate titans to the government is clear: shape up and fix the problems or more companies will expand their business abroad and deprive the economy of investment.
Many, such as entrepreneur Kiran Mazumdar-Shaw, are already doing just that.
Ranked by Forbes as one of the world's most powerful women, she is investing about $200 million in a manufacturing plant in Malaysia for her biotechnology firm Biocon Ltd to offset unreliable power and water supplies back home. It already makes more than half its sales overseas.
"If India had better infrastructure and more availability of power I may not have gone abroad," said Shaw, who followed in her father's footsteps with a master's degree in brewing in Australia before setting up Biocon in her garage in Bangalore 35 years ago.
"We don't have enough power, we don't have enough water. So some of these projects where we need water and power, I will do it in Malaysia because that's where it is abundant," Shaw, who is ranked 92 in India's rich list with a net worth of $625 million, told Reuters in an interview.
She is one of many top entrepreneurs voicing frustration that policymakers failed to keep economic reforms rolling over the past decade, which they contend would have prevented India from stumbling into its deepest economic crisis since 1991, when it was forced to pledge the country's gold reserves in exchange for international loans.
Economic growth has almost halved in pace to less than 5 percent in the past six years, a flood of cash leaving the country has led to a record current account deficit and combined with a rout of emerging markets, has sent the rupee into a tail spin. At its record low of 68.85 per dollar in late August, it was down around 20 percent from the end of 2012, the worst performer among Asia's currencies. It has since risen slightly to 65.24.
The lack of reform and infrastructure, painfully slow decision making and red tape are common complaints of corporate India, but this time they could come at a cost as the rupee crisis shows businesses how vulnerable they are. Continued...