Tuesday, December 1, 2015

According to the NY Times article Mr. Modi recently stated that climate change is not India's fault, but that India is suffering the consequences of it. What can he do?

Since arriving in India in 2012, seeing the a drastic lack of good infrastructure,like roads, and vast open spaces, it struck me early on that India had a very interesting opportunity.  Unlike the United States and other first wold nations -- that has billions invested in aging infrastructure that is too expensive to rebuild --, India, at a time of rising economic stability could, if properly managed -- emerge as a world leader in areas like solar and other renewable energies. 

Can India Reinvent Itself?

When you travel around India there are tens of thousands villages prime sources to build out solar
energy resources. Roads and city planning based on the newest most available technologies give them an edge, if they seize that opportunity. India is deep in engineering and technology talent, so why not use it for their own benefit and rebuild the nation, rather than just sourcing it out for a fee?

In his e-Book "Convenient Action: Gujarat's Response to Challenges of Climate Change"   Prime Minister Modi positions himself as a forward-thinking champion on climate change. Whether he is or not is yet to be seen.

He has many detractors, such as Jairam Ramesh -- who served as minister of the environment of the former government (Indian National Congress party) before Modi took power, who said that “I think Obama got carried away with Modi, frankly” He notes that Modi made one breakthrough with Obama“against the advice of everyone in the system” to limit the use of hydrofluorocarbons, or HFCs, a component in refrigerators and air-conditioners.

According to Mr. Ramesh “India is not an easy country to negotiate with"; "We are moralistic, we are
argumentative, we are regressive. 

From the little bit that I have gleaned of this subcontinent nation, their potential is almost unlimited --with the right government and support of the people. They have the youngest educated workforce in the world, highly accomplished in engineering, technology and medicine. But they are also marred with an archaic, top-heavy and burdensome bureaucracy, that makes it at times very difficult for foreigners to do business here. I can only imagine that it can be difficult for locals as well.

Setting up a business here, for example, takes a lot of time, money and energy: just filing a document requires a notary to use no less than seven stamps on every page of the document. Taxes are assessed on wholly-owned India companies whether the company has profits or not, This means that in the first year you're paying taxes based on an average of your local competitors profit margins -- even if all the funds brought into the company were used to build the company infrastructure. 

This is highly counterproductive. Foreign companies are not motivated to invest -- as the more you invest, the higher the taxes on that investment, which in part is why foreign companies opt to set up subsidiaries solely as cost plus scenarios, rather than build those companies into higher profit entities.

Whether Prime Minister Modi can be the force of will to break the old way of doing things in India is yet to be seen. History will record him as the man who changed India, or just another politician who tried, and failed to tame a nation that could have been. 

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