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How's business in India? Watch Bangalore

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Amid India’s lowest economic growth in almost a decade, the challenges faced by those doing business in India are compounded by political and legal risk, despite the efforts of officials to attract new business to Andhra Pradesh.

Citing challenges such as unclear laws and heavy-handed bureaucracy, Amit Midha, president of Asia Pacific and Japan for Dell told Reuters last week that India is a tough place to do business.

“New decision makers come and they don't honor the contract previously signed,” he said.

The often prickly relationship between officialdom and business in India affects not only big-name foreign investors such as Dell, but also Indian businesses based in Bangalore. Local authorities are trying to take over the running of Electronics City, a 440-acre IT industrial park about a 45-minute drive from downtown Bangalore, apparently to boost Bangalore's tax revenues, according to local press.

That move looks likely to be resisted by businesses based in the district, with the Electronics City CEO N.S. Rama reportedly expressing reservations to India's central government about the Bangalore local authorities' plans.

"We must not bring down Electronic City to the level of infrastructure that is in Bangalore," said Mohandas Pai of Manipal Global Education Services, based in Electronics City.

Communal tensions could compound the challenges facing Bangalore. Last week, thousands of Indians from the country’s northeast fled the city fearing  violence following ethnic and sectarian fighting in Assam state in the northeast.

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