Owning and running a business in India is still a tough nut to crack. India still fares poorly in the ease-of-doing-business world rankings, published by the World Bank. India’s position is 130 out of 189 countries, says World Bank Report 2016. Singapore tops the list and is considered the favorite destination for business investments.
Nepal, Sri Lanka pip India in the race
China is placed at no. 90, whereas India’s other neighbors, such as Nepal and Sri Lanka, have fared better on the list, being placed at 99 and 107 positions, respectively. Pakistan too has fared better than India, being placed at no. 128. Although, India’s position has marginally improved from last year, is it enough to bring back foreign and institutional investors? India needs investments for its primary sectors such as infrastructure and agriculture and for that to happen a favorable business climate needs to be created.
Government’s tall claims
Despite the government claiming to be pro-business and announcing a plethora of policy decisions in that direction, it seems the steps have not been adequate to change the ground reality, where small and medium enterprises have to confront and tackle red tape, nepotism, corruption and sometimes simply the muscle power of local thugs or goondas day in and day out. Will the effect of the announcements percolate to the ground level? What can be done to ensure that policies don’t remain empty words but bring relief to people for whom they are meant?
Deskera’s survey points in the same direction
The findings of the World Bank report are not off the mark. According to a survey conducted by Deskera, most of the small and medium enterprises either said that operating conditions haven’t improved or that they were confused about the effect of various government announcements, which are meant to ameliorate the situation. The respondents were asked about the ease of doing business in India.
Caution is in the wind
Although industry has welcomed initiatives such as one-day incorporation that the Government recently announced during Budget 2016, they are cautious in their approach to the policy decisions. When asked about the policy, they were upbeat about it, but chose to adopt a cautious approach, preferring to rather wait and watch.
“One-day incorporation is a good idea. But it will have to be implemented on the ground. I am still not clear how the scheme will work. If I want to get my company incorporated today, how do I go about it? Bureaucracy and red tape hit us every day. A number of questions still need to be answered and the specifics worked out,” said Yuvraj Singh, who runs a supply chain-based SME.
Drivers of the report
The report takes into account factors such as the procedure, time, cost and minimum capital required to start a business, get construction permits and electricity connection, register property, and get credit. The index also factors in protection of investors, the amount and number of taxes, and trading across borders. Enforcing contracts and resolving insolvency are also aspects that the report looks at.
“The time taken to get an electricity connection for a newly opened warehouse is very long. Also, the number of documents, cost and time necessary to export and import is complex and difficult to get. We also don’t have a clear picture about the time, cost and recovery rate under bankruptcy proceedings,” said Pradeep Jain, another entrepreneur.
Experts say that although entrepreneurial activity has picked up over the past few years, there is a lot of room for improvement in the regulatory environment and that the government must ensure transparency in business regulations.