Frustrated MNCs Pull Out Plans to Invest in India

Frustrated with Indian regulations, Wal-Mart, Berkshire Hathaway, Posco and ArcelorMittal have withdrawn their plans to invest in the country, according to Wall Street Journal.

 

India's rapid growth in recent years has been luring investment, but the growing lack of clarity on regulations  have made investors more cautious.

 

Bharti Retail Ltd., Wal-Mart's local joint-venture partner, returned to the previous owners the 17 plots of land that were to be used for new stores, according to the Economic Times, an Indian newspaper.

 

A Wal-Mart India spokeswoman claims that Anand Sharma, India's trade minister, had promised during a meeting in June that the regulations governing investment in multibrand retail would be amended to provide greater clarity on the policy.

However, when the government announced plans allowing more foreign investment in India, there was no mention of multibrand retail.

 

The South Korean mining giant Posco pulled back its plans to spend $5.3 billion to construct a steel plant in the southwestern state of Karnataka, citing cited difficulties in obtaining permits, delays in acquiring land, uncertainty over supplies of raw materials and deteriorating market condition as reasons.

 

ArcelorMittal also cancelled plans for a steel mill in the eastern state of Orissa, citing similar reasons.

 

In December, Arun Balakrishnan, the head of Berkshire's India online insurance business, told the Journal that the company was planning to be among the top-three online insurance agents in India within three to five years.

 

Berkshire "has decided to discontinue their online model of selling insurance," said a spokesman for Bajaj Allianz General Insurance Co., for which Berkshire was acting as an exclusive corporate agent, on Wednesday.

 

While it wasn't clear why Berkshire Hathaway ended its investment in India, the country's insurance industry had been broadly unhappy with foreign-investment restrictions, says the Journal.
 

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