Doing business in India still not very easy

By Vipin Agnihotri

No one is going to argue with the fact that India is inching up the scale in terms of the ease of doing business. In my opinion, it seems to be moving quicker as compared to countries like China but still India has miles to go before it can catch up.

According to ‘Doing Business 2008’ report of World Bank, India improved its overall rank on ease of doing business to 120 out of 178 countries, up from 134 last year. If experts are to be believed, improvements occurred in mainly two areas, getting credit (a increase of 26 points) and cross border trade (a increase of 63 ranks) helped. On the other hand, China’s rank rose to 83 from 92.

It has come into the notice of The India Street that India has shown a decline on the other eight parameters, mainly because of other countries reforming much quicker. The most serious slippage of 18 places was in ease of starting a business.

It is worth mentioning in this regard that India requires entrepreneurs to go through 13 procedures, which by the way is double the average for developed nations and 50 per cent higher than its regional peers. In an ideal scenario, business owner will require at least 33 days to start a business in India.

Point to be noted here is that this World Bank report scope is restricted to business regulations, therefore there is an every possibility that the rankings may not tell the whole story. In my opinion, this is certainly the case with India, since the World Bank report links the pace of reforms to equity returns possible in the country.

Another issue is the roadbocks to foreign branded retail and opposition to loal retailers like Reliance Fresh. Walmart India is quietly entering Mumbai while other foreign brands are knocking on the door to India. The reception is luke warm by business people and violent by local opposition leaders.

Theoretically speaking, investors look for upside potential and they find it in economies that are reforming, irrespective of the starting point. Fact of the matter is that equity returns are the quickest in countries which are reforming the most and becoming transparent. While India may relish the returns and pace of reforms to date, things could be even better if there is improvement in tax payment systems, additional FDI reforms, and property registrations.

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