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Doing Business May Not Be Getting Easier In India...
Fri, 28 Oct Pre-Open

Entrepreneurs face a lot of risks in setting up and running a business. However, the situation is not the same all over the globe. The ease of doing business varies greatly across various countries. Some of them have favorable laws to encourage businesses. Many do not.

What about India? How does India fare on various parameters of ease of doing business? Before we look upon that, let us briefly understand why ease of doing business matter for businesses in a particular nation.

As per economics 101, success of businesses is not dependent upon product innovation or market knowledge alone. There are host of external factors that decide the fate of any business venture. Out of various factors, bureaucracy stands as an important factor that can make or break any business. If a great idea finds resistance from bureaucracy than it can fall on its head.

That's it. External support from government is important for any business. Lower the government interference, greater the independence and better the operating environment.

Unfortunately, things in India are not this easy. India remains one of the planet's toughest places to do business. This we say as the World Bank, in its latest report, ranked India at 130th position out of 190 countries in ease of doing business for 2017. This records an improvement of just one place over the last year.

While India made substantial improvements in some areas like electricity supply, the slippage in other areas like payment of taxes had restricted the further improvement in the rating.

Going by individual factors, the ease of starting a business, it slipped to 155th from 151st last year. On dealing with construction permits, it stumbled to 185th from 184th. On paying taxes, it held steady at 172nd.

The above factors give us the indication as to the amount of change and work that is needed to make India an attractive investment destination - not only for foreign companies but even for local entrepreneurs.

The government of India targets of making India part of the top 50 list. While the task may be ambitious, the 'Make in India' campaign seems to have created quite a buzz across the world. All that needs to be done is focus on the improving the key pain points in this regard and things should improve at a substantial pace.

Some progress in this regard is visible. For example, on the parameter of getting electricity, India has improved to 26th spot from 70th spot last year.

So as things stand today, one can say that we are just work in progress. And there is a long way to go before we can actually make some song and dance about the ease of doing business in India.

The need of the hour is to foster an environment that is more supportive of private sector activity. And this will take time. But if the efforts are sustained over the next several years, they could lead to substantial benefits for Indian entrepreneurs - along with potential gains in economic growth.

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Mar 19, 2018 (Close)