World Bank has create an Ease of Doing Business Index/Economy Rankings and while Singapore tops the chart, India stands at a dismal 122nd position (Sri Lanka, Nepal, and even Pakistan is ahead of India).
The ranking has been done on the followingparameters:
- Starting a Business – Procedures, time, cost and paid-in minimum capital to open a new business
- Dealing with Construction Permits – Procedures, time and cost to obtain construction permits, inspections and utility connections
- Employing Workers – Difficulty of hiring index, rigidity of hours index, difficulty of firing index, firing cost
- Registering Property – Procedures, time and cost to transfer commercial real estate
- Getting Credit – Strength of legal rights index, depth of credit information index
- Protecting Investors – Strength of investor protection index: extent of disclosure index, extent of director liability index and ease of shareholder suits index
- Paying Taxes – Number of tax payments, time to prepare and file tax returns and to pay taxes, total taxes as a share of profit before all taxes borne
- Trading Across Borders – Documents, time and cost to export and import
- Enforcing Contracts – Procedures, time and cost to resolve a commercial dispute
- Closing a Business – Recovery rate in bankruptcy
Top 5 countries in the list are:
- Singapore
- New Zealand
- US
- HongKong
- Denmark
- UK
[check out the index here]
What’s your take on this report (‘Size does matter?’)
This is so true. As an entrepreneur with businesses in New Zealand, China, Europe and India, I cannot believe how difficult it is to operate in India when compared to all others. Are there any advantages for anybody for making business life so difficult?
As a 50% shareholder of my Indian company, I have to travel to India regularly for board meetings and so on. I used to have a 5 years business visa which makes sense considering the frequent travels during which I cannot give my passport away for just another visa application. However during a recent visa application, I could feel a big change in India’s government policies. It seems where business investment of all size was encouraged just a few years ago, now this is not the case. India’s government – or at least the Munich department in Germany we’d been dealing with – has become extremely arrogant and is only looking for the big bucks of already highly profitable multinational companies. In our case, business visas extending over a year are not given to medium sized enterprises any more. An indication how much turnover, profit etc. is required to meet the criteria is not given anywhere. The system that worked so well just a few years back and what made investment easy in India seems to have ceased to exist or has been replaced by highly arrogant people that have no practical business experience or interest in fostering good relations between international small and medium sized enterprises.
This might be an exception in the form of a very personal experience but would I have made this experience a few years back, there would have been no way we’d have invested so much. Luckily we found good people in India before making bad experiences with lausy officials. But if the government has a real interest in investment, it better put business attuned and experienced people in the right places and not stubbornly pre-judging officials. You might expect that in India, but not when you launch an application in a foreign country. If I cannot even travel to my own company at ease, how can I run it effectively? India better gets her act together in this regard or there are plenty of other places to outsource to.
It is quite interesting to see that 3 out of 4 economies which were barked at as the next generation economies (BRIC) falls within 120-125.
Among the BRIC (brazil, Russia, India and China) only china is little up on the chart (at 80)… rest three are closely packed around 122!!!
Is it indicative of something?
It is quite interesting to see that 3 out of 4 economies which were barked at as the next generation economies (BRIC) falls within 120-125.
Among the BRIC (brazil, Russia, India and China) only china is little up on the chart (at 80)… rest three are closely packed around 122!!!
Is it indicative of something?
Sorry… forgot to say great post – can’t wait to read your next one!
Just to add little more on the above, the Doing Business report not only rates the countries on ease of doing business but also the cities in these countries (for large countries). 17 Indian cities ranked are as follows:
Guwahati (Assam)
1) Ludhiana (Punjab): easiest
2) Hyderabad (Andhra Pradesh)
3) Bhubaneshwar (Orissa)
4) Gurgaon (Haryana; also in Delhi NCR)
5) Ahmedabad (Gujarat)
6) New Delhi (Delhi)
7) Jaipur (Rajasthan)
9) Ranchi (Jharkhand)
10) Mumbai (Maharashtra)
11) Indore (Madhya Pradesh)
12) Noida (Uttar Pradesh)
13) Bengaluru (Karnataka)
14) Patna (Bihar)
15) Chennai (Tamil Nadu)
16) Kochi (Kerala)
17) Kolkata (West Bengal)
NOTE: The ease of doing business is calculated as the ranking of the simple average of city percentile rankings on each of the 7 topics covered. The ranking on each topic is the simple average of percentile rankings on its component indicators. Source Doing Business database
The Doing Business report is based only on 7 indicators. To make it more explicit, please read the following direct quote from the report.
“Doing Business in India does not measure all aspects of the business environment that matter to companies or investors, nor all of the factors that affect competitiveness. It does not, for example, measure security, macroeconomic stability, corruption, labor skills, the underlying strength of institutions or the quality of infrastructure. Nor does it focus on regulations specific to foreign investment.”
In simple words: Since all the variables, important for a business to grow and be successful, are not covered in the report, you must not take too seriously. Please do your own city specific research based on your business needs and objectives.
Navin Pathak
Senior Partner
Entry India, LLC
http://www.entryindia.com
Yep..we will cover this shortly
India is the center of gravity of the third world. What else did you expect ?
There is nothing wrong with our system in India. India will become the largest economy in the world. If you wish to deal business with us. Thou shall follow the rules of our land. Those foreigners who willing to share wealth, shall stay. Those are not willing to, shall leave. Simple as that.
It’s not the problems that exist in doing business in India today which worries me, but this kind of arrogance or rather “false pride” Farhad is writing about. Such is deeply concerning when India shall become the largest economy in the world… – the saying “when in Rome, do like the Romans do” might well be true but who knows – maybe if the Romans themselves would not have thought like that, their empire would still be existing today…