Foreign companies are becoming frightened of investing in India because of its heavy bureaucracy and tax policies, US-based Honeywell International chairman David Cote was quoted as saying on Wednesday.
“Foreign companies are starting to become scared here,” Cote said in a Wall Street Journal interview.
“They are starting to say: ‘What am I doing here?’” he added, warning that investment could be diverted to China and other countries.
“I still think China is a very good place when it comes to putting money on the ground,” Cote said.
Honeywell, a technology and manufacturing conglomerate, generated about US$600 million in sales and the same amount in exports from India last year, the newspaper said.
Cote is the latest international voice to warn that India risks losing foreign investment because of policies considered unfriendly to business.
Foreign investors have been worried by proposed Indian legislation that would allow the government to retroactively tax the sale of Indian assets, even if the seller and buyer were foreign.
Vodafone is in a battle with Indian authorities that could cost the British mobile phone giant more than US$2 billion in a case the outcome of which could have implications for other foreign companies.
Foreign corporate confidence in India has also been sapped by government paralysis in enacting further reforms to liberalize the still mainly inward-looking economy.
“I will hire people here, but I will be a lot more reticent about investing, including acquisitions,” Cote told the Wall Street Journal. “I worry that the [Indian] bureaucracy is becoming stultifying.”