India is often considered as a difficult country to do business, and is ranked far behind its BRICS (Brazil, Russia, China, South Africa) counterparts. The latest World Bank Doing Business Report ranks countries on 10 parameters - starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority shareholders, paying taxes, enforcing contracts, trading across borders and resolving insolvency – and places India at the 130th position out of 189 countries. Arsha Consulting takes you through the background and implications of such promising results. 

India now ranks 130 out of 189 countries in the ease of doing business, moving up 12 places from last year, according to the World Bank Doing Business Report. According to World Bank's Chief Economist and Senior Vice President Kaushik Basu, “For any big economy, a rank improvement of 12 is a remarkable achievement. Going from 142 in the world to 130, as India has done, is very good sign. It gives a good signal about the way things are moving in India.”

The report identifies several good practices and improvements reached over the last year:

  • In starting a business, India eliminated the requirements for a paid-in minimum capital and a certificate to commence business operations, significantly streamlining the process for starting a business. In 2004, it took 127 days to start a business in India. In 2005 this had been reduced to 29 days.
  • In getting electricity, India's rank jumps to 70 in 2016 from 137 the year before. For example, the utility in Delhi made the process for getting an electricity connection simpler and faster by eliminating the internal wiring inspection by the Electrical Inspectorate.
  • In dealing with construction permits, India ranks 183 and in registering property it ranks 138. For example, the government has initiated reforms by starting work on setting up a single-window system in Mumbai. Once implemented, this is expected to reduce the bureaucratic burden.
  • In protecting minority investors, India now ranks 8th and in getting credit it is now placed at the 42nd spot. The report noted that the Indian law grants minority shareholders strong protection from conflicts of interest and provides extensive rights for shareholders in major corporate governance.
  • In paying taxes and enforcing contracts, India is now ranked at 157th and 178th spots respectively. For example, the government is developing a single application form for new companies and introducing online registration for tax identification numbers.

The results sound encouraging and will possibly be even more promising next year, as the Modi government had set the target of being in the first 50 first rankings of Doing Business Report. Lopez Claros, Director of the Global Indicators Group World Bank, shares his personal point of view: "My expectation, therefore, is that if this process continues, if it is sustained, and the authorities show the degree of determination which has been in evidence in the last year, then we could see substantial improvements in coming year".

Laetitia Sieffert | Senior Consultant – International Trade
Arsha Consulting

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