Remember the Switzerland-based Holcim Group, which sold its India ventures – Ambuja Cements and ACC – to Adani a few weeks ago? Well, it’s not just them, but there’s a long list of MNCs that are quitting India. Reasons include regulatory concerns, failure to crack the price-sensitive Indian market, high tariff barriers, red tape, complex land policies, and infrastructure issues. This results in hindering their ease of doing business in the country.
While Holcim said the reason for its exit was to focus on green revenue and to reduce exposure to the carbon-intensive cement sector, we highly doubt that is the case. A slew of big names, including German retailer Metro AG, US automaker Ford, UK banking major Royal Bank of Scotland, and US banking behemoth Citibank, too, have been giving up on India recently. Has the homeland lost its charisma?
India on tenterhooks?
Out of the 10,756 foreign companies that registered in India between 2014 and 2021, as many as 2,783 have shut their India operations. This is a big deal, given that there are only 12,458 active foreign subsidiaries remaining in India.
These numbers are upsetting since they come at a time when India is trying to position itself as an alternative to China in a post-Covid world, where many MNCs are looking to diversify their supply chain.
It isn’t easy to ignore India – given its vast population and huge market potential – but doing business here is not a cakewalk. “India is probably the highest tariff nation in the world,” former US President Donald Trump said as he lamented the high import tariff that Harley-Davidson had to pay here.
Oh, and it isn’t just the MNCs. Overseas professionals don’t see the beef in India either.
In the aftermath of the pandemic, foreign professionals declined job offers from Indian companies citing factors such as the local healthcare system, high pollution, and safety. Headhunters said that Indian companies wooing overseas talent for emerging sectors such as electric vehicles, batteries, solar and renewable energy, and aviation faced tremendous rejections.
Further, only about 25% of overseas professionals actually agree to come and work in India. However, it takes double the time to close a senior ex-pat job vacancy, usually 5-6 months, as compared to 2-3 months to hire a local CXO-level position. Is it worth it?
Too long? Here’s a one-liner: Foreign MNCs are increasingly taking the India exit; overseas professionals are not in favour of working in India, citing healthcare, pollution, and safety as the major reasons.