Indian Taxes Exceed the Limit

International companies like Tesla, Parimatch, and Nokia have faced a tough road in the Indian market. With minimal intellectual property protection, oppressive tax rates for multinationals, and complex legislation, the Indian business environment often feels hostile—even to the biggest players. Many are reconsidering their investments or contemplating an exit. However, if India revises its approach to foreign investors, it could still grow into a $5 trillion economy by 2027.

India’s Market: What Are the Concerns?

As one of the world’s most populous countries, India has the potential to overtake China in attracting foreign investment. Many business leaders hope India will adopt a more welcoming attitude toward international companies, but so far, changes remain elusive.

India remains unwelcoming to leading firms such as Nokia, Parimatch, and Tesla, imposing excessively high tax rates on foreign investors without clear justification. Multiple tax authorities often hold conflicting views on taxation, creating systemic problems that hinder economic growth. According to Paderborn University and the World Bank, India ranks 53rd out of 100 for tax code complexity and 58th for overall tax system complexity.

Domestic vs. Foreign Taxation

Research by Vakil Search shows that domestic companies pay significantly lower taxes compared to foreign entities. Over 130 countries adjust tax rates to attract international businesses, but India lags behind in this regard. Globally, multinational corporations with revenues exceeding €750 million pay a minimum of 15% tax, whereas India charges 30% for foreign companies, compared to a 23% global average.

Fintech expert Sagar Narendrakumar Surana points out the inefficiencies in India’s tax administration, with overlapping authorities often issuing contradictory requirements. He suggests that adopting electronic tax filing and payment systems could simplify processes, encouraging investment from companies like Parimatch.

No India for Tesla

Tesla is reconsidering its presence in India due to prohibitive taxes—60% on budget vehicles and 100% on cars over €30,000 (₹3,000,000). Such policies make continuing operations untenable.

Heavy Tax Burden Drives Companies Away

Many businesses struggle to thrive amid India’s unpredictable tax laws and frequent policy changes, resulting in fines and legal issues. Despite government invitations for foreign investment, companies continue to scale back or leave. Major firms like Amazon, Foxconn, IBM, Nokia, Walmart, Cairn Energy, and Shell have faced legal and tax challenges. Parimatch has yet to enter India, while Wistron and Foxconn exited long ago, exemplifying the hostile environment.

Judicial Pushback on Taxation

As reported by Economic Times, gambling taxes increased from 18% to 28%, provoking industry backlash. The Electronic Games Federation filed 27 court appeals against this hike, but the government remains firm, prompting investor departures.

The gaming sector exemplifies India’s tax chaos. Companies like Dream11, Games24x7, Head Digital Works, and Gameskraft face massive tax demands, some exceeding billions. Although the Karnataka High Court initially overturned such tax notices, the Supreme Court later stayed that decision, prolonging uncertainty.

Intellectual Property Protection Fails

India’s inadequate IP enforcement adds to foreign investors’ woes. Counterfeiting is rampant; for example, Parimatch—without an official Indian presence—faces widespread brand piracy. Scammers flood the market with counterfeit products, undermining legitimate competition and deterring investment. Healthy competition would foster industry growth and opportunity, but Indian authorities have yet to grasp this fundamental business principle.

Vishwas Bhagwat, a computer networks exporter and businessman, notes that the lack of funds and political will to fight counterfeiting, coupled with a convoluted tax system and complex registration, repels foreign innovation and capital accustomed to transparent markets.

Foreign Capital Flows to Vietnam

According to Taxguru, India’s barriers to multinationals lead to lost job creation and capital flight. While India struggles to attract investment diverted from China and the US, Vietnam welcomes it. US Ambassador to India Eric Garcetti remarked, “We want to move foreign direct investment from China, but FDI is not coming to India at the pace it should be. Instead, it goes to a country like Vietnam. I selfishly want this to happen more in India.”

Conclusion: India’s Untapped Potential

India remains one of the world’s most promising markets, rich with opportunities for domestic and foreign firms alike. However, to realize its economic potential, the government must implement reforms to create a business-friendly environment. When India opens its doors fully, companies like Parimatch are ready to invest heavily in the economy.