Chinese companies that are eyeing investment in India will face challenges, but the market is still appealing as potential opportunities exist, experts said on Wednesday at a panel discussion hosted by think tank Internet Research Institute.
Inadequate basic infrastructure is one of the main challenges faced by Chinese enterprises, said Wu Shunhuang, a Chinese entrepreneur who has been doing business in India for three years.
According to a report published on the website of the World Bank, India ranked 36 out of 160 economics in terms of basic infrastructure construction in 2015.
"The infrastructure development in India lags about 20 years behind China, which is why many Chinese firms have showed an interest in investing in the country but soon abandoned their plans after on-site investigations," Wu told the Global Times on Wednesday.
Another problem stems from India's inefficient and corrupt bureaucracy, which has dampened Chinese companies' enthusiasm for investing, Lin Minwang, professor of the Institute of International Studies at Fudan University, noted.
India ranked 130 of 189 on the World Bank's "ease of doing business indicators" in 2016, said a statement on the organization's website.
Wu said that it took him about two months to get his company approved by the New Delhi government, which is much longer than the "one week of approval" promises made in 2015.
Besides, in line with Indian law, the signing of an office lease needs to be notarized by a local judge. But the process took him an extra six months to complete, possibly because the landlord didn't bribe the judge, he said.
After successfully establishing the companies, Wu said he had to deal with the most complicated tax system in the world. "There are so many flaws in the tax law, and I advise every Chinese businessman to hire a local accountant and lawyer to avoid the risk," Wu said.
However, despite the difficulties, experts noted that there are still many opportunities in the Indian market that Chinese investors can tap into.
China can invest in India's infrastructure building sector, experts noted. The move will result in a "win-win" situation, as China wants to export some of its industrial overcapacity to foreign markets and India is simultaneously seeking to boost its infrastructure construction.
Considering India's labor cost and the potentially huge market offered by its "demographic dividend," Wu also suggested that Chinese manufacturers could transfer some of their production lines to India.
High-tech companies like Alibaba Group and mobile manufacturers like Xiaomi have entered the Indian market through purchasing local companies' shares or establishing local factories.