As the world’s third-largest economy, with actual and projected growth rates of 7.5 percent in both 2015 and 2016, India remains a virtually impossible to ignore market for the global multinational. The economic opportunity reflected in these figures finds additional encouragement in the investor-friendly statements of India’s Prime Minister, Narendra Modi, whose BJP party came to power in May 2014 promising reform, anti-corruption measures and accelerated economic growth. New initiatives from the Modi government, such as the expansion of sectors open to foreign direct investment, further boosted investors.

Notwithstanding these developments, India remains a challenging market in which to do business. The World Bank’s latest ‘Ease of Doing Business Report’ ranks India 130th out of 189 nations, and toward the bottom in several sub-categories, including 183rd in dealing with construction permits and 178th in enforcing contracts. Complex laws, a byzantine bureaucracy, ‘middle men’ serving as fixers and facilitators, and an endemic expectation of corruption all underline the challenge of operating in compliance with local and international anticorruption standards. Global measures of corruption in India bear out these concerns.

The country stands 76th out of 168 countries ranked in Transparency International’s ‘Corruption Perceptions Index’ for 2015. That same organisation’s ‘Global Corruption Barometer’ for 2013 noted that 65 percent of respondents felt that public officials and civil servants in India were corrupt or extremely corrupt, while 86 percent said the same of political parties. Other Indian institutions did not fare much better: parliament (65 percent); business (50 percent); the judiciary (45 percent); police (75 percent); and medical and health services (56 percent). Suffice it to say that, in India, corruption is a hard and persistent reality.

Jul-Sep 2016 Issue

Jones Day