According to a report by
AP, Ajay's dilemma is consequence of corruption, bureaucratic red tape and unstable government policies. Many Indian industrialists with funds to invest are already considering taking their funds out of the country to more investment friendly economic environments.
India's business moguls have been expressing frustration over corruption, inconsistencies in official regulatory policies and difficulty in acquiring land. Jamshyd Godrej, chairman of manufacturing company Godrej and Boyce, said to AP: "If you are an honest businessman in India, it's very difficult to start up anything. Companies are going to operate where they see the best opportunities and efficiency for their capital."
After Piramal sold the generic drug operation of his health care business to a U.S. pharmaceutical giant Abott Laboratories for $3.8 billion, he began looking for a new line in which to invest the sum. Pirmal had first considered investing in expansion of his chemical plants but was told it would take five years. Piramal said: "The same plant could be set up in China in two years. I love India, but my customer is not going to wait." According to
AP, he has been approached by many people with proposals of investment in the infrastructure sector, but he complains that these were mostly people with no knowledge or track record in the area. He said: "And yet they were coming to us saying we have licenses and approvals. That just didn't sound right or smell right." Pirmal says most of these people name influential politicians as their backers and in their books they resort to what he calls "creative accounting."
Piramal's unwillingness to invest in India's infrastructure sector is supported by Jagannadham Thunuguntla, head of research at SMC Global Securities, who explains that four of India's top infrastructure companies have lost over 80 percent of their value since 2007. He says that because of the inefficiencies in the system, "Infrastructure investment has become untouchable, a sure way of losing money."
The trend of capital flight from India has become a source of concern because investments are needed for developing the country's infrastructure. In recent times, thousands of middle-class protesters took to the streets to push for an anti-corruption bill on the floor of the parliament.
That India has a class of professional industrialists who distinguish themselves from the official bureaucracy is, however, a positive sign for the country. Eric Terfa Ula-Lisa, writing in the
Nigerian Village Square , says that In Nigeria, the only billionaire businessmen are those who are clients of government and who achieved success through government patronage. Many front for senior government officials and thus, the interests of government and of big private businesses are inextricably entwined.
