A few weeks ago, the President of the Swiss Confederation, Doris Leuthard, was in India. What did that mean for India?
The visit was very interesting because it took place after a long time. During the visit, the Indian government was very receptive, and the industry was quite receptive. The fact that there has been movement in the form of treaties in many areas laid the groundwork for a very good interaction. I think that there is a positive mood regarding Switzerland. Switzerland has high technology, it has financial services and other things to offer India. India has a large market for Swiss companies, which bring extensive expertise in manufacturing technology for consumer goods and in financial services to India. This was a very positive move, and we look forward to greater investment with Switzerland.
In which business fields do you see concrete investments?
Investment can come in many areas that could be of interest to Swiss investors. There are opportunities in high-tech manufacturing, the area of watches, the IT and technology sector, financial services, wealth management and so on. Switzerland has the quality, and many Indians are looking at foreign investment too. We have many companies here with high growth, and the Indian story is very compelling. There are also 26,000 start-ups, which are just a couple of years behind Silicon Valley in sophistication and are growing rapidly. India will be one of three destinations in terms of economic growth in the next 15 years, and it will be a huge consumer market. This is because we are, unlike the rest of the world, supply-constrained.
Switzerland and India are negotiating a Free Trade Agreement. Does the FTA play a key role in the trade between these two countries?
I think that the Free Trade Agreement is key, but it is pending negotiations. I would say that India is free for trade. Our tariff barriers are very low. The average tariff barrier is just 7%. And India imports more than it exports. Trade deficit is expected to be 135 billion dollars this year. India is open for business, and even though a Free Trade Agreement is a good thing to have, it actually takes time for both governments to undertake to sign an agreement because India wishes to have an agreement for trading services within the Free Trade Agreement. I’m sure that India will be able to sign a Free Trade Agreement with Switzerland.
Since July 1, India has had the GST, the Goods and Services Tax. What do you think are the benefits of this new tax?
I think that the GST is the biggest taxation reform since India became independent in 1947. For the first time, we have become one single national market. Until this came into existence, we had 29 different markets because India has 29 states. Each state had a border, with a border check post, and shipping from one state to another meant that you had to get the relevant documents cleared at the check post and go to the next state; and taxation levels were different in different states. It was very inefficient to ship across India; in a way, it is reminiscent of how Europe was before the European Union.
Experts say that Swiss products are more expensive with the GST than before. How beneficial is this tax really?
No, I think Swiss products will be cheaper than before, because previously, the taxes were higher. To sell a Swiss product, you had to pay customs duties, get it cleared and then sell it to a reseller, and the reseller had to sell it to somebody else. In addition, the customs duties that you paid were not trackable, and were not taken as import taxes. Today, when you sell Swiss goods to final consumers in the entire supply chain, all the taxes paid are taken as import taxes. Of course, if you sell directly to a consumer then you might see some import taxes, and when you sell from Switzerland to the final consumer, there is a slight increase in taxes.
On October 5, you will be part of the Asia Leaders Series event in Zurich. How important is dialogue between India and Switzerland?
India and Switzerland’s trade and investment have not yet realized their full potential. The reason is very clear: There has been a distance between India and Switzerland and we must bridge that distance. We are all very excited about coming to Switzerland, meeting business leaders, answering their questions and developing their brand for India, because the time for India has now come. Our GDP is expected to grow from 2.5 trillion dollars this year to about 10 trillion dollars in 2030. So, we will see tremendous growth. India has grown by 8.4% in terms of dollars between 1997 and 2017. And 8.4% every single year. This is a tremendous track record, and we can expect a similar kind of growth in the next 15 years. Another important aspect should be mentioned: India is not a top-down story. India is a bottom-up story.
Mohandas Pai will be addressing investors and executives at the Baur au Lac in Zurich, on Thursday, October 5th 2017. More information
About Mohandas Pai
Mohandas Pai is a well-known business man in India. He is most widely recognized for his long-standing role as Board Director and CFO of Infosys. He served alongside Narayana Murthy at the helm of Infosys for 17 years, and they grew the company from 100 to 147,000 employees. He was the first Indian CFO to take a company public on the NASDAQ. Since stepping down, Mohandas Pai has launched an ecosystem of frontier-technology venture funds in the US-India corridor, deploying a significant amount of capital into some of the world’s most innovative early-stage companies.
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