In September 2019, the Finance Minister Nirmala Sitharaman had made a deep cut in the corporate tax rate from 30% to 22%. India’s combined effective tax rate was among the highest in the world. After the tax cut, the effective tax rate for all domestic companies has been reduced to 25.17%. India’s base corporate tax, due to this move, is now on par with most Asian countries – increasing its competitiveness in the global market. This move comes in response to the brewing problem of the economic slowdown in the country. The cut in the corporate tax rate was seen as a boon by the corporates in the midst of the growing crisis within the Indian economy.
Indian judiciary, according to National Judicial Data Grid Statistics, has about 3 crores pending cases. Due to its slow pace, many prefer arbitration to solve the issues of dispute settlement, monetary recovery, etc. To encourage foreign investments and promote ease of doing business, faster judicial procedures and efficient dispute resolution are essential. Provisions to settle disputes through arbitration are provided in Arbitration and Conciliation Act, 1996. This law was amended twice: in 2015 and during the recent parliament session.
Many foreign investors have pulled out of China in response to the tensions arising from the Trade War. This was made use of by countries like Vietnam, Singapore, etc., for their economic development.
India, in 2015, scraped the 2013 BIT model and brought in a new model which was in effect in 2017. This has caused an unfavourable investment environment within the country. India has also pulled out of BITs with 58 countries.
This model according to a Brookings Report is Pro-State with limited security to the foreign investors in India. India’s pulling out of BITs have created uncertainty amongst the foreign investors in India and Indian investors abroad.
Recently, the World Bank has released the Ease of Doing Business Index. India has jumped 23 places in the ranking at 77th position as the country made it easier to start a business, deal with construction licenses and enabled faster cross-border trading.