The economic health of any country is hugely dependent on the ease of starting / doing a business in it. In other words, countries which offer a conducive environment for business end up attracting more businesses resulting in a flourishing economy.
DoingBusiness has been publishing its ‘Doing Business’ index for a few years now and the report serves the exact same purpose – How business friendly a country is! It is one of the most exhaustive report with 183 countries and uses a large number of factors to rate a country’s potential to attract and retain businesses.
Based on the latest Doing Business report, India’s ranking has improved by 7 places to 132 from the earlier 139.
A lower rank is a sign of improvement meaning that the overall business environment has improved in India. However, it is disheartening to see that even with the improved rank India is behind most of its South-Asian counterparts when it comes to ease of doing business, infact India’s rank is higher than the South-Asian average of 117
Ease of Doing Business Comparison
They say "Devil is in the details"! It comes out in full-light when you see India fare on various factors that comprise the overall doing business rank.
Starting a Business in India – Rankings of Various Factors
Not a lot to talk about here, is there! The diagram shows India faring poorly across all major factors except for one and too. A top level analysis of some of these factors throws light on things that are probably wrong and right when it comes to India’s business environment
Fair Financial Environment
Indian ranks fairly well for access to capital and such as evident from Getting Credit (40), Protecting Investors (46). This suggests that the overall policies governing access to capital and other regulatory policies are favorable.
However, India fares very badly in Paying Taxes (147) but it has shown improvement from last year (165) signifying that the taxation policies in India have improved marginally
Starting A Business Continues To Be A Painful Ordeal
The poor ranking in factors like Starting A Business, Dealing with Construction Permits etc. does hint at poor policies governing the registration and initiation of a new business. Delving deep into the sub-factors, even as the cost of starting a business in India has gone down from last year, the procedures and the time taken for completing those procedures still remains high. One wonders if too much bureaucratic processes hinder the same
International Trade Logistics Have Worsened
This I found really surprising. Even as the time to export documents has decreased by a day as compared to last year, the cost to export as well as import documents has increased.