NEW DELHI—If businesses like certainty, then India has been a big turnoff for foreign companies.

A series of recent developments have greatly increased the perception that the country has a risky business environment where policies suddenly can turn hostile.

Tax proposals in the national budget unveiled in March stunned foreign firms. They could create significant retroactive tax liabilities for international mergers stretching back a half-century and eliminate a tax exemption many investors now have, wreaking havoc on corporate deal making, legal experts say. More than a half-billion dollars in foreign capital has left the Indian stock market in recent days.

The government also singled out a U.K.-based oil producer for a multibillion-dollar levy that the company calls discriminatory. Internet executives from Google Inc. and Facebook Inc. are facing criminal prosecution for not removing Web content that some consider objectionable even though the companies have said they followed the letter of the law. And long-promised efforts to liberalize foreign investment in the retail, defense and insurance sectors have stalled.

Foreign companies long have braved the risks of corruption and a stifling bureaucracy in the hopes of capitalizing on the fast-growing emerging Indian market. And New Delhi has done its part to court foreigners at international events like the World Economic Forum's annual conference in Davos, Switzerland. But the tax proposals, which are set for an April vote in Parliament and designed to reduce a yawning budget deficit, have helped heighten anxiety about doing business here.