Foreign companies are becoming frightened of investing in India because of its heavy bureaucracy and tax policies, the chairman and CEO of Honeywell International Inc. (IW 500: 36) was quoted as saying on Wednesday.
"Foreign companies are starting to become scared here," Honeywell's David Cote told the Wall Street Journal in an interview.
"They are starting to say, 'What am I doing here?'" Cote said, warning that investment could be diverted to rival China and other countries.
"I still think China is a very good place when it comes to putting money on the ground," he told the Wall Street Journal.
Honeywell, a technology and manufacturing conglomerate, generated about $600 million in sales and the same amount in exports from India last year, the newspaper said.
Cote is the latest international voice to warn that India risks losing foreign investment because of policies seen as unfriendly to business.
Foreign investors have been worried by proposed Indian legislation that would allow the government to tax retroactively the sale of Indian assets, even if seller and buyer were foreign.
Vodafone is in a battle with Indian authorities that could cost the British mobile-phone giant over $2 billion in a case whose outcome also may have implications for other foreign companies.
Foreign corporate confidence in India also has been sapped by government paralysis in enacting further reforms to liberalize the still mainly inward-looking economy.
"I'll hire people here but I'll be a lot more reticent about investing, including acquisitions," Cote told the Wall Street Journal.
"I am a lot less keen on expanding our presence by putting money into the country -- it's not a smart thing for me to be doing," he said.
"I worry that the [Indian] bureaucracy is becoming stultifying," Cote added.
Copyright Agence France-Presse, 2012