India is emerging as a land of opportunities for business and investment despite the lack of institutional mechanism to find right venture partners, the presence of red tape and complex tax laws and poor infrastructure, Canadian companies doing business in the country have revealed in a survey.
"Despite challenges, entering India has been rewarding and majority (63 per cent companies) plan to expand operations in the country," the survey conducted jointly by KPMG, a leading audit, tax and advisory multinational company, the Canada-India Business Council (C-IBC), and the Canadian Manufacturers and Exporters and Association (CME) said.
Of companies interviewed for the recently conducted survey, 68 per cent were currently operating in India, 34 per cent were exporting goods to India, and 24 per cent importing goods from India.
Those currently doing business in India have been in the country an average of seven years. Thirty-nine per cent of them have been in the country between three and 10 years, and 33 per cent have been there more than 10 years.
The survey found that among the top challenges faced by Canadian companies were bureaucratic red tape and inconsistent interpretation of rules.
The companies were also challenged by poorly maintained distribution, infrastructure and transportation system; and the complicated tax laws.
The communication gap between them and the government, financial institutions and other organisations because of different communications mode and styles was also a major problem, the survey said.
"However, despite the problems, Canadian executives expressed optimism about the promise that is India and are generally pleased with their business results, recognising that much is being done by the government to help businesses overcome some inherent challenges," the survey said.
The survey noted that thirty-five per cent of the companies relied on their own financing to expand and do business in India, while 12 per cent obtained funding through letters of credit from Indian companies, and an additional nine per cent received government funding.
Commenting on the survey, C-IBC President Kam Rathee said: "Economic reforms in India are moving in right direction, but they must be accelerated. We know there is a recipe for success. Understanding the challenges and knowing how to manage them will go a long way towards ensuring profitability of Canadian companies with minimal frustration."
He said India represented an economic opportunity on a massive scale, and should not be viewed as a single investment destination.
"While India is a vast and regionally diverse country, proper planning and a solid understanding of the environment as a whole and various regions would go a long way to ensuring success," Rathee said.
He said the country was a viable and enticing option because of its large population, untapped resources in educated blue and while collar workers; an increasingly affluent middle class; low cost of doing business; fast
growing economy, and English as a language of business.
The survey was conducted recently across Canada, and the sectors represented included information, communication and entertainment; consumer market; industrial and automotive parts; and engineering and consulting.
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