India Country Profile

Snapshot of the India Country Profile

India is one of the most attractive investment places in the world thanks to its low cost labour and the stable political climate. India has liberalised the economy during the last 20 years and the government has a business-friendly policy. The business climate is on the other hand hampered by a cumbersome bureaucracy and pervasive corruption at all levels of government. The political system is characterised by deep-rooted patronage systems and public officials have vested interests in their positions. Corporate integrity is also very low, as scandals regularly highlight Indian companies' payment of kickbacks both when operating inland and abroad. The federal structure of government means that huge differences in the level of corruption and the responses to it exist between one state and the other.

Positive developments in relation to corruption and investment:

• The Right to Information Act 2005 (RTI Act) has worked as a powerful instrument to enhance governance transparency. The RTI Act grants access to administrative documents within 30 days and has been actively used to hold public officials accountable for their decisions and to monitor public spending.
• The Supreme Court has taken some bold steps by upholding corruption charges in cases involving politicians and high-ranking government officials.
• The government has striven to simplify administrative procedures and to reduce physical encounters with public officials that could open the way for facilitation payments. The National Portal of India is a good example of these simplification efforts.

Risks of corruption:

• Public servants have very wide discretionary powers which offer the occasion to extorting undue payments from companies and ordinary citizens.
• The numerous bodies charged with combating corruption have conflicting mandates and suffer from lack of qualified staff and funding.
• The awarding of public contracts is notoriously corrupted, especially at the state level. Scandals involving high-level politicians have highlighted the payment of kickbacks in the healthcare, IT and military sectors.