Face2Face!

‘INDIA NEEDS ANOTHER ROUND OF REFORMS’

Regulatory burden for
businesses must be reduced,says OECD Deputy Secretary-General Richard Boucher believes India should keep reforming its economy to continue on the growth track irrespective of the
forthcoming elections.
In an interview to Business Line
on the sidelines of the World Economic Forum for East Asia in
Nay Pyi Taw,Myanmar, he made a strong case for easing regulatory
hurdles and taxation reforms.
Excerpts from the interview:

What do you think India should do to reverse the slowdown in its growth process?

Part of India’s slowdown has to do with external factors. But our basic view is that India needs
another round of reforms. You started that last September.
The country has to open up some more to competition even
if there is an election coming up.
It will bring much broader benefits if other sectors are
opened up as opposed to one specific sector.

What can be done in the short run?
It has to keep smoothing the way for projects. Focus has to be on how to reduce the regulatory
burden on projects and companies. We are now starting
the next economic survey of India which will come out next
year. A lot of reforms that we want to see are the ones that are
already underway. But you need a political push to get them
through.

What kind of regulatory hurdles
are you talking about?

We don’t want to say no environmental reviews. Big projects need environmental
reviews. You just need to structure them in a way that is simple. Having to make the
rounds of 20 different offices,when one can go to one place, is not desirable.

OECD recently came out with a paper on Base Erosion Profit
Shifting (BEPS). How is it relevant for India?

The way the world trades has changed. Manufacturing value
comes not only from pieces and parts, but also from services,
business process and brands.
Companies structure their business process in a way they pay least amount of tax. It
decreases the capacities of taxation authorities and national governments to tax the process.
But it is mostly the multinational
companies that get away with it
whereas domestic companies that are smaller can’t do it. It is fair for both companies and
nations to develop a new idea of how the value chain should be
taxed. What parts get taxed and how things should be priced.
That is the idea behind BEPS and India is contributing strongly to it.
So will this put an end to the tax disputes that the Indian
Government have with companies like Apple and Vodafone?
What I am saying is that it will give everybody — Apple and the tax authorities, Vodafone and the tax authorities, Starbucks and the tax authorities — a clear idea of what gets taxed and where.

What is the progress on India’s participation in OECD’s anti-corruption initiative?

India is an active observer there.People from the ministry of
personnel, CBI and other departments have used the
platform to make contact with other people in the world they want to talk to. India has got a
proposed legislation in front of Parliament to ban bribery of
foreign officials which is a commitment it has made in the UN convention against
corruption. It is the same commitment that is required to
participate in the anti-bribery committee of the OECD.