Monday, February 28, 2005 Asia

Bloomberg is reporting that India is reducing its corporate tax rates to lure foreign investment. This is good news for the average Indian. India has only begun to catch up to China in the minds of western investors, in terms of desirability of investment. But India holds distinct advantages over its neighbor: First, and foremost, India is a democracy and its legal system has roots in the same British common law as the American legal system. Second, english is almost universally taught in the schools. Even though Indians have that funny accent, they do not require translation, and can do work that, like call centers, medical transcription and auditing, that Chinese simply can't. Third, the Indian diaspora is far-flung. From Western Europe to the South Pacific, people of Indian descent are everywhere. Do not discount the advantage that personal familiarity can give. If you live or work next to an Indian guy, you're (hopefully) less hesitant to put some money into a factory in Pune. These factors, along with a better regulatory and tax climate, should make India very attractive foreign investors in the foreseeable future.

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