The Indian Supreme Court's decision to cancel 122 controversial mobile phone licenses has opened up a new round of scepticism about India as a destination for foreign investment, according to Time magazine.
Outlining the issues in the controversial allocation of licenses for '2G' spectrum by then telecom minister A. Raja, who is in custody awaiting trial, the prestigious US magazine said: "The outcome may be the worst case possible for those worried about wobbly investor confidence in India."
"First, it sends a signal to companies dealing with India's powerful ministries and bureaucrats that following the letter of India's regulations is not enough," it said in a long story titled "India Hangs Up on the Mobile Phone Industry - and Investor Confidence."
Despite economic liberalisation in many sectors, India's rules regarding foreign ownership of companies, imports, exports and taxes remain extremely complex, Time said citing it as the reason for India's low 132nd place in the World Bank's latest ease of doing business rankings.
While publicly telecom companies go along with whatever the government demands, privately they say "they are increasingly frustrated with India's regulators, who seem more concerned with maximizing revenue than protecting consumers or developing the industry," Time said.
Telecom isn't the only industry that has become wary of India's tantalising but not-quite-free market potential, the US magazine said citing the 'politically disastrous round of flip-flopping' over opening of retail sector to foreign investor.
Suggesting the ruling "Congress Party is extremely vulnerable on the issue of corruption in state elections this year and national polls in 2014," Time said for Prime Minister Manmohan Singh's government the political fallout of the Supreme Court judgment is far more important than the opinions of foreign telecom companies.
"Having hung up on the mobile phone industry, Singh's government is now hoping that voters will still take their call," Time said.