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The
Indian environment isn't conducive to investment: Raj Loomba
An interview by Ranju Sarkar
His
is the dilemma of a typical NRI. He loves his country, yet is chary of
investing in it. As the knitwear king of London, Raj Loomba's Rinku PLC
manufactures for a several high-street stores like John Lewis, C&A, Fenwicks,
besides retailing his own knitwear brand. The last time Loomba made an
effort to kick-start business in India, red tape and poor infrastructure
scared him off. In an interview with BT's Ranju Sarkar in London, Loomba
shared his unpleasant experience, and explained why the native won't put
his money where his heart is.
Q. Why do the NRIs seem averse to investing in India? All that the
Indian government is saying is come and invest. It's like inviting people
to a dinner, and then offering something that they are not used to. It
doesn't help. For any company to come to India, it needs good infrastructure,
stability in government policies, good banking systems, and good facilities
for transport.
Q. Have you ever
thought of importing from India or setting up a project here?
I would love to import from India, but I seem to fail every time
I try. Two years ago, I wanted to transfer some business from China. It
was a large order, around Rs 1 crore. I was free to place the order anywhere,
but I went to Ludhiana, where I stayed for three weeks to educate suppliers
on what problems they have and how they can be solved. I discovered that
a particular quality of yarn was not available. But I had contacts in
Taiwan, and ordered some samples. When they arrived in India, the Customs
would not clear the samples because we didn't have an import licence.
I was not aware that I needed a licence to import 4 kg of yarn. The duty
was assessed at Rs 14,000 and a penalty of Rs 9,000, totalling Rs 23,000.
I was astounded by this event. And I decided not to clear the sampling
yarn. Worried that in case of a larger shipment of yarn, it may lead to
bigger problems, I abandoned the plan to source it from India, and went
back to China. India lost the order and a great opportunity.
Q. Transnationals
appear to have faith in India. Why don't the NRIs? Transnationals
can afford to take risks, but we are first-generation entrepreneurs. Probably,
they don't understand the country as well as we do. Besides, we don't
have the financial muscle to diversify or take risks. I work in China,
and make money. I would like to do that in India too, but the environment
does not allow that.
Q. We say Indians
are good entrepreneurs. Isn't taking risks a part of entrepreneurship?
I will take risks in the UK, but not in India. I might take a risk
in China, but not in Philippines. It depends on the business environment.
You need good infrastructure, law & order, and stability of government
policies. You have all this in China. In fact, in many aspects, China
exceeds Europe in infrastructure. You have no problems with electricity,
roads, and hygiene. Workers are educated and skilled. And the Chinese
mean business. Most Indian suppliers don't.
Q. NRIs do seem
interested in portfolio investment though.
Portfolio investments are much clearer, but setting up a manufacturing
unit is very complicated. I don't feel the need to put myself in any kind
of inconvenience. As an entrepreneur, I am used to certain environment
here. That environment is not there in India.
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