The Biden government should be alarmed by the recent elections of several foreign companies to withdraw from the Indian market or suspend their long-term plans. The US, for years, hopes to support the rise of India as a way to monitor China’s power. But even though India is the fastest growing country in the world, its economic policies continue to upset American, European and Japanese officials as well as investors.

Western Democrats, who see India as a friend of nature, believe that India can achieve its economic and military potential only if it faces major threats. This, would only be possible with the huge foreign exchange reserves and the reopening of Indian markets. While India’s economy is expected to grow by 8 percent in 2022 and 6.9 percent in 2023, it is less than the 12.5 percent and 8.5 percent predicted by the International Monetary Fund (IMF).

India’s growth is due to the large consumer market rather than multiplying foreign exchange (FDI). The Indians seem to be convinced that India’s trade is very high, their stock market is booming and the middle class in India has done what economists call post-epidemic experts “a return of money.” But western Indian partners see India as “a difficult place to do business,” according to the 2021 Investment Climate Statement of the US State Department.

According to the Heritage Foundation’s 2022 Index for Economic Freedom, India ranks 27th among the 39 countries in the Asia-Pacific region, with the highest interest rates at regional and international levels.

From the point of view of US and India allies of the West, it is an unexpected story. India cannot meet China without tackling the huge differences in their economic growth. China currently has a nominal GDP of $ 17.7 trillion while India’s GDP is $ 3.1 trillion. On the other hand, India is expected to surpass China as the most populous country in the world by 2023, raising its domestic challenges by providing food, education and employment to a growing number of young people.

Given the economic differences with China, as well as the needs of the growing population, it seems logical that India might want to attract FDI. But between 2019 and 2021, the global FDI inflow into India has declined, from 3.4 percent to 2.8 percent. Meanwhile, China’s share of FDI in the world has risen from 14.5% to 20.3 percent.

While the US, Europe, Australia and Japan all see India as their future partner, their corporations are outsourcing or reducing the size of their operations in India. The Swiss company Holcim, Royal Bank of Scotland, Harley-Davidson and Citibank have already announced plans to reduce or eliminate India.

A German retailer in Metro AG sells its Indian operations after 20 years. Both Ford Motor Company and Tesla have announced that they have suspended plans for the production of electric vehicles (EVs) in India. The election, at a time when the Indian government is promoting renewable energy, is linked to higher tariffs and tax cuts in India.

This week, French spiritist Pernod Ricard, the creator of Chivas and Absolut, announced the decision to suspend India’s new currency due to “permanent” tax disputes with local authorities that began almost 30 years ago.

About $ 100 million in Amway finance, an American multimedia company that sells health, beauty and home care items, has been suspended by Indian police while the company is being investigated for “pyramid schemes.” Surprisingly, the company has been doing business in India for thirty years with the same type of direct sales.

In addition, Ricard is not the only global business facing tax crises in India. IBM has had $ 865 million in an escrow account since 2009 when a tax dispute over tax returns through Indian law. India could have spent IBM about $ 1 billion if used properly.

Two UK companies – the giant Telecom Vodafone and electronics company Cairn – have been hit by huge revenue taxes based on legal changes after mergers or acquisitions. The Indian government took ten years to pay taxes, after India lost two cases to the World Bank’s International Center for Settlement of Investment Disputes (ICSID) and The Hague court.

Despite the difficulties, the growth and location of India continues to be a valuable market for foreign businesses. The former state-owned Air India, now owned by Tata Group, has announced plans to upgrade all 300 of its jets in one of the largest pilots in aviation history. Boeing and Airbus are the main competitors in the deal. Finding a large consumer market in India is a dream, as is the prospect of participating in the development of Indian weapons and armaments.

But, by and large, the prospects for modern India, the fast-growing, prosperous, and free market-loving India have not been fulfilled at the rate that some predicted in the first few years of the 21st century. becoming the biggest enemy of the global economic crisis, China. This makes India’s economic policy a source of concern for US policymakers.

Husain Haqqani is the director of South and Central Asia at the Hudson Institute. He served as Pakistan’s ambassador to the US from 2008 to 2011. Aparna Pande is the director of the Washington-based Hudson Institute’s Initiative on the Future of India and South Asia.

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