KPMG India CEO elaborates on reforms required in the Indian economy
India is looking to become an attractive destination for foreign investment, and the major areas of potential improvement include corporate governance and responsibility, as well as measures to reduce the cost of doing business, according to KPMG India Chairman and CEO Arun Kumar.
As it rockets towards the position of second largest economy in the world in coming decades, India has been taking several measures to improve the domestic business conditions and ensure that its potential is realised. Campaigns such as Make in India and the Goods and Services Tax are all aimed at facilitating economic growth.
Nevertheless, conducting business in India continues to be accompanied by significant costs and regulatory barriers, which places it in low positions in rankings such as the Ease of Doing Business index and other foreign investment attractiveness assessments. International business leaders have indicated that this scenario must be rectified.
In India, leaders of the business world have been engaged in debates and delibrations around how to achieve greater ease of doing business. The latest of such deliberations took place at the Mint India Investment Summit, where a discussion was held among representatives from the financial and consulting sectors.
Chairman and CEO of Big Four accounting and advisory firm KPMG India Arun Kumar was among those participating, alongside Chairman of Edelweis Financial Services Rashesh Shah, and Axis Bank Senior Vice President and Chief Economist Saugata Bhattacharya. Kumar had a number of insights about areas of improvement.
“India needs to enhance its corporate governance norms. We need to emphasize the importance of boards and identify that their key purpose is in creating value and protecting minority shareholders. India also needs to look at the role of group governance, where we need audit committees at the group level, and independent directors, who bring skills and value and prevent the board from becoming an echo chamber are important,” he said.
“For example, Microsoft published the list of independent directors and their areas of expertise. Thinking on these terms is an important aspect of corporate governance. A certain amount of regulations is necessary, but we need to be watchful of the right level of regulation.”
He concluded, “There is a huge future for India to progress through entrepreneurship. But there are many wrinkles to be ironed out. For instance the new tax structure on angel investors. There is plenty of infrastructure developing for all kinds of innovation.”
