At the end of last month, Indian Prime Minister Modi traveled to the United States to lure US companies back to India to invest. According to the Wall Street Journal, just four years ago, the US investment stock in India amounted to approximately $1.9 billion, and now four years later it is only around $800 million. PM Modi tried to assure the likes of Boeing, IBM, GE, Citigroup or PepsiCo that he is cutting through all red tape and making sure that foreign investments are safe in India. The reality, however, tells a different story. The second largest cell phone company in India, Vodafone, has been battling the Indian government in arbitration courts over the imposition of retro-active taxes. Before entering India, Vodafone was promised tax breaks by the government, but after the check cleared, parliament instituted a new law that required Vodafone to pay taxes AND back taxes. Amazon is stuck in limbo, too. When Amazon entered it was fairly certain that as an online platform it would not be subject to retail regulations, but now it seems it will. WalMart, which had announced lofty plans for the Indian market not too long ago, has also put India on the back burner, and only operates wholesale stores there under a joint venture agreement. In most Western countries, the law is the law. In some countries, however, there are no laws or there are sometimes even contradictory laws. And in yet other countries, laws are either changing constantly or they are subject to interpretation. It seems as if some cultures have laws to make their lives easier and more predictable, while other cultures have laws to because … well … why … I mean….! The lesson is that companies need to pay close attention not only to differences in the law, but also to differences in how law is applied and practiced.
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