#991 Oil Prices And Stalemate In West Asia Will Determine Market Direction This Week

The Core Report

The episode examines the structural challenges of doing business in India, focusing on the heavy regulatory burden and the need to pivot fro

Key takeaways

• Indian businesses navigate a massive regulatory labyrinth of 1,536 acts and over 69,000 compliances.
• Jahangir Aziz of J.P. Morgan suggests India should prioritize being a 'safe' destination rather than just the 'cheapest'.

Main topics

• Ease of doing business in India
• Global oil price volatility

Notable quotes

India must pivot from pitching itself as the cheapest or easiest place to do business to positioning itself as the safest.

Conclusion

Global investors are increasingly valuing security and resilience over

Transcript preview

Speaker 3 (0:02) Good morning. It's Monday, the 28th of September, and this is Govind Raj, ITI Raj, broadcasting and streaming weekdays from Mumbai, India's financial capital. The take. Last month, I was invited to speak at an industry gathering where the presentation's flanking mind fixated on a familiar obsession of tax minutiae and the ease of doing business. Having sat through countless such panels, I was struck once again by a perennial truth. Indian businesses still expend a staggering amount of capital and caloric energy simply battling the regulatory system. Ease of doing business has become a rhetorical catch-all to describe the bureaucratic agony of enterprise in India and the piecemeal efforts to relieve it. And looking back on decades of reform promises, one wonders if we will ever reach a point where commerce feels genuinely unimpeded. India famously climbed to 63rd place in the World Bank's 2019 doing business rankings up from 142 in 2014. We don't have a ranking after that because the bank scrapped the index entirely amidst data irregularities and ethical scandals. And yet, much like India's headline GDP numbers, the corporate reality on the ground rarely aligns with the optimism of the metrics. Consider the regulatory ticket. A Teamlease Rectex study two years ago calculated that India Inc. must navigate a labyrinth of 1,536 acts, 69,233 compliances, and 6,618 annual filings. While no single company bears the entire brunt, the exact load varies by geography, sector, and headcount, the aggregate burden remains suffocating. Labor regulations, according to that report alone, accounted for nearly half of all compliance requirements and alarmingly, 68 % of those provisions carried imprisonment clauses. Even when the state manages to streamline one set of rules, as it has in the last two years, a new hydra inevitably emerges elsewhere, often within or around the tax codes. The competencies required to manage this friction shift, but the total burden rarely diminishes. Which really prompts a necessary question. Is it time to move the goalposts? In an interview I conducted last week in Mumbai, Jahangir Aziz, co-head of macroeconomic research at J.P. Morgan, suggested exactly that. For 30 years, he says, India has tried to improve the ease of doing business and it frankly hasn't eased much. Why, he asked, should we continue fighting a battle that is structurally hostile to victory? Instead, Aziz argues, India must pivot from pitching itself as the cheapest or easiest place to do business to positioning itself as the safest. The guiding principle of global capital allocation has profoundly shifted over the last five years, he says. Multinational corporations and investors are no longer chasing marginal cost arbitrage. They are deploying trillions to secure supply chain resilience. Aziz noted that J.P. Morgan, his firm, alone wails a $1.5 trillion loan book to promote security and resiliency alongside $10 billion of its own capital invested in companies advancing those exact goals. The vulnerabilities of the old model are glaring. Aziz quotes the example of India's pharmaceutical industry, a massive global exporter of generic drugs. drugs, but which remains perilously dependent on Chinese APIs or active pharmaceutical ingredients. If Beijing halts exports for some reason, the Indian drug sector collapses. Global investors are now willing to pay a premium to mitigate precisely this kind of geopolitical and operational risk. Now, this does not mean we abandon the crusade for simpler industrial policies or a rationalized tax code, but we must recognize that genuine ease of doing business will evolve at a glacial pace. In the interim, our immediate focus, as Aziz says, must be on offering global capital the one asset it currently values above all else, a sanctuary of safety and resilience. Which brings us to the top stories and themes. Oil prices and the stalemate in West Asia will determine market direction this week. Get set for price rises across the economy. What does the US-China bonhomie in Washington mean for India? And government asks businesses with captive power plants to work at full capacity and sell the surplus power. Speaker 1 (4:15) This is The Coral Port with Govind Raj Aithiraj. Speaker 3 (4:21) And before we kick off, I will be speaking with leading cardiac specialists on the 6th of October about prevention, early detection and the hidden risks we often overlook when it comes to heart health. The discussion is called Don't Miss a Beat, The Hidden Risks to Indians. This is happening on Tuesday, the 6th of October at 8.30am at The Coral in Mumbai. And if you'd like to join us, you'll find the registration link in the show notes. Speaker 3 (4:46) Iran said it's awaiting a definitive U.S. response to a seven-day proposal for reopening the crucial state of Hormaz, but will not soften its condition. The Islamic Republic is aware of Trump's remarks, though has yet to receive anything from mediators Qatar and Pakistan. Bloomberg quoted Foreign