‘No country in the world is willing to invest in India’, economist Surjit Bhalla’s shocking statement

Surjit Singh Bhalla: Considering the global situation, the current situation is very bad. Therefore, it is having a bad effect on the Indian stock market as well. Foreign investors don’t seem so keen. In it, the now famous Indian economist Surjit Bhalla recently expressed concern about the investment climate in the country. He noted that not only foreign investors, but also domestic investors are now reluctant to invest capital in their own country. Although India often presents itself as a major investment hub in the world, the country has to face a harsh reality, asserts renowned economist Surjit Bhalla. But why did he make this shocking statement? What exactly is the reason?

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Why is foreign investment declining?

Surjit Bhalla, former Executive Director of the International Monetary Fund for India, Bangladesh, Bhutan and Sri Lanka, in an article in The Indian Express, stated that foreign direct investment has been on the decline for the past several years and the reason for this is not global uncertainty. According to him, companies and investors around the world make investment decisions based on profit potential; They have nothing to do with government appeals. He alleged that the rules for foreign investors in India have been made so complicated that it seems like they are being punished through higher taxes and stricter regulations just for investing in the country.

India should take a lesson from Indonesia

According to him, the root of the problem lies in an investment agreement of 2015. Since 2015, India has either abrogated or amended bilateral agreements with several nations. By the time of 2024-25, these agreements were completely terminated. Realizing that the new contracts offered less guarantee of legal protection, investors withdrew from investments as a result. He asserted that India should learn the right lesson from Indonesia.
He gave the example of Indonesia; Because that country had also abrogated its old and defective treaties with various nations. However, they replaced those agreements with new rules aimed at attracting investors, guaranteeing security and strengthening the rule of law. As a result, foreign investment in Indonesia increased from $14 billion to $20 billion over the past decade.

Strict and complicated rules from India

In 2015-16, India created its new ‘Model BIT’; This made the exit routes and dispute resolution mechanisms more complicated for foreign investors. Under these new rules in India, when a foreign investor gets involved in a dispute, he has to deal with local court proceedings for years, before he is allowed to resort to international arbitration. He argued that instead of trying to hide its flawed system, India should try to address doubts and fears about the legal security of foreign investors, just like Indonesia.

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