Country risk is low to moderate in India, with the OECD giving India a country risk score of 3; scores comparable with the Philippines, Thailand and Indonesia. This indicates a relatively low to moderate likelihood that India will be unable and/or unwilling to meet its external debt obligations—though individual private debtors can and do default. Payment delays are an issue in India. According to the Atradius Payment Practices Barometer, the proportion of overdue domestic business to business (B2B) invoices increased again to 58% in 2018. This contrasts with 37% in Australia. But the Indian government has introduced more effective bankruptcy and insolvency laws that should make it easier for creditors to seek repayment from debtors who are in arrears.
India’s is ranked 77 out of a possible 190 on the World Bank’s ease of doing business scorecard. Dealing with construction permits, trading across borders, protecting minority investors, getting electricity and credit are easier in India relative to most emerging Asian economies. But enforcing contracts, starting a business, paying taxes and registering business are still difficult. Prime Minister Modi aims to get India within the top 30 economies by 2020.
The risk of expropriation in India is low to moderate. But under legislative enforcement (Enemy Property Act -1968), over 2,100 properties were seized during the wars with Pakistan and China in the 1960s. Even though India has reversed its stance on systematic expropriation, the volatile economic environment suggests that government interference may still be a possibility.
India’s political risk is low to moderate. India scores above the emerging and developing Asian averages on all governance indicators except for political stability and absence of violence.