Swedish ambassador to India Harald Sandberg believes lack of clarity in taxation and regulatory standards that don't conform to what is followed internationally create difficulty for Swedish companies to do business in India. He tells Nayanima Basu the next big wave of Swedish investments will be in the retail segment. Edited excerpts:
Swedish firms have made a visible presence in India. What's next?
Indo-Swedish relations have gone through various phases of business engagements. It was Ericsson which first opened its unit here in 1903. And today, they have their largest operation here. They employ more people here than they do in Sweden. So it is clear how important India is for them. That was the first wave. The second wave of Swedish companies came here with Volvo, Scania, Tetra Pak, Alfa Laval and others. This wave became very visible. So far, Swedish companies have created around 150,000 jobs in India. Some of the key campaigns launched in India during 2014 perfectly fit the portfolio of our companies such as Make in India, Smart Cities, Digital India and Clean India.
Are these companies planning to expand?
Ericsson is building another plant in Pune now. They already have one in Rajasthan with around 20,000 employees. But Pune is where you will find a cluster of Swedish companies. In 2013, Tetra Pak opened a plant in Chakan in 2013. This cluster is growing. Eventually, the third wave of Swedish companies came into Bengaluru with Volvo and Perstorp around the 1980s and 1990s. This was followed by the entry of Volvo's trucks and buses. Then its competitor Scania also came in; it opened its factory last year to make trucks and buses. So, we are seeing about 150 Swedish companies active in India at present.
Where will the next wave be?
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The next wave is clearly in retail with the foray of H&M and IKEA. H&M has already opened its first shop and IKEA is coming in with huge investments. It will be visible when they start. We are also seeing a wave in the small- and medium-sized companies.
With such huge presence comes challenges, too. IKEA was quite vocal about the sourcing norms in the single-brand retail foreign direct investment policy...
IKEA is very systematic. They believe in what they do. And now they are coming big. I have not met any company in any country that does not have something to complain about. It is always challenging to run businesses. And challenges differ from country to country. Last year, the Swedish Chamber of Commerce conducted a business climate survey. The one for this year is running now, and we are going to have the results early next year. Last year's survey was very positive. Swedish businesses are here for the long run. There is a deep knowledge of doing business in India and that is partly why they are successful.
You said the flagship programmes are in line with Swedish firms' ideology. But we still hear international investors complaining about taxation and other regulatory regimes...
The programmes are very good from a business point of view, but they would like to see concrete measures being taken. Some of the obstacles faced by them, though, come in from three clusters - bureaucracy & corruption; taxation; and import regulations & customs duty impact. The first one leads to dealing with public authorities, which in turn leads to time-consuming measures. Taxation, especially the delay in GST is the main obstacle that Swedish companies face. We know this is an important issue and we are hopeful it will be rolled out soon. This will make a big difference. With import regulations, the difficulties are in the detail. Companies need to import to be able to export. But when regulatory standards and norms are different from what is followed internationally, then it creates difficulty for them to do business here.
How crucial is the India-EU FTA for you?
For our industrial growth, deeper and broader commercial increase investments, especially when you are looking at the long-term, I think the FTA is of huge importance because that will integrate the economies. So it is of high priority for us.
What about Smart Cities? Is Sweden planning to adopt a city or do you want to stay more on the technical side of it?
Our minister for urban development is coming to India next week. He is also our IT minister. We believe in developing systems and technologies and create linkages. We have internationalised high-tech companies in a small market. The Stockholm bus services, for example, runs on waste, basically on biofuel. So we have such companies that utilise waste for everything. Then we do something like networked societies. There are other countries which are adopting cities like that for bringing in technologies. But we believe in clustering and a sectoral approach. Ericsson and ABB are involved in such activities.