Clearly one of our favourite topics; India is about state level business. SIBC participated in the 11th India Forum arranged by the German Marshal Fund of the United States (GMF) on September 8-9th. One of the issues discussed was the growing focus on the role the state vs. Central government. Already in 2013 Sweden-India Business Council increased its focus on various states, both in seminars and via the INSIGHT Sweden-India digital Magazine. Actions being taken today, and discussions in forums like GMF are a clear testament to the fact that this shift, to bring more focus to state level understanding, is critical to operate in India today. The election in 2019 will act as a referendum on the ambition of Prime Minister Modi. For this reason, the Goods and Service Tax (GST) is likely to be the last major reform before the election. As GMF panellists concurred, the next three years will focus on consolidating power. There are 23 state elections before the National election and we can expect to see Modi and the BJP making strong moves to win each one.
Decentralisation has gone fast forward with states taking actions that had been formerly undertaken at the central level. The fact that 16 states have already passed GST in local assembly can be read as states moving fast to get ‘good government ratings’ in the ease of doing business but it is also needs to be seen as a step to take control of how policy is scripted for them. It goes without saying that the GST will surely be implemented by its 2017 deadline.
During the GMF discussions, it was debated that the Modi government has been on the receiving end of criticism for more talking than doing. But in actual face, more has actually been done than one would think; there has been a true government shakedown at the higher levels with direct communication with the PM, something previously unheard of in India. Internal witnesses at high levels share that the government is keeping a clean sheen in regards to corruption. Labour and land acquisition regulations have been moved to the states, and should be seen as a first step to get things moving.
For the next three years as stated, it will be political consolidation with firm implementation on passed reforms and regulations such as the GST.
SIBC is having GST experts on 6-th and 7th of October in Stockholm and Gothenburg also discussing the Arbitration act, the FDI regulation change in e-Commerce and for the large enterprises the bank and insolvency code. All of these are highly important from a regulatory point of view as well as financial. It promises to be a most interesting day. Welcome!