India Ups the Ante–Again

India Ups the Ante–Again

March 2, 2005

India’s new government budget, released on Monday, will further intensify global competition for capital. The budget cuts corporate tax rates from 35% to 33% and cuts nonfarm tariffs from 20% to 15%. Simultaneopusly India’s central bank announced new, less restrictive, rules on foreign bank ownership.


Last Friday India’s cabinet announced it has lifted foreign investor restraints on land ownership. In recent weeks, their government lifter the allowable foreign ownership on telecom companies from about 50% to about 75%.

India’s government gets it. The country that does the best job attracting and holding capital will have the fastest increases in living standards. This year India will grow 7%, about like they did last year.

We can learn from India. Tax rates and regulations are powerful tools that can be used to attract, or repel, capital.

America is not competing for jobs with India; we are competing for capital. Our children’s paychecks are at stake.

JR

John Rutledge

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