This development is believed to help the country lure multinational companies, thus becoming an alternative to China for investment, amid Beijing’s trade war with the US -
In the recent ‘Ease of Doing Business 2020’ study released by the World Bank, India has climbed 14 rungs among 190 countries to stand at number 63, thus making it one of the world’s top 10 most improved countries for the third consecutive time.
Only last year, India jumped 23 places to reach the 77th position. In last five to six years of the Modi government, India’s ranking has improved 79 places - from 142 in 2014 to 63 in 2019- a record for a major economy.
This development is believed to help the country lure multinational companies, thus becoming an alternative to China for investment, amid Beijing’s trade war with the US.
“Despite some challenges in the implementation of the reform particularly regarding court operations and the application of the law by multiple stakeholders—the number of reorganizations in India has been gradually increasing. As a result, reorganization has become the most likely procedure for viable companies as measured by Doing Business, increasing the overall recovery rate from 27 to 72 cents on the dollar," the World Bank said.
‘Ease of Doing Business’ is an annual survey published by World Bank, where countries are ranked on the basis their performance on 10 parameters. These parameters include dealing with construction permits; starting a business; enforcing contracts; trading across borders; getting electricity connection; getting credits; registering property; paying taxes; resolving insolvency; and protecting minor investor.
While India performed well on 6 indicators, the rest 4 indicators with no significant achievement are - registering property; paying taxes; resolving insolvency; and protecting minor investor.
Target for 2020: Opportunities & Challenges
Prime Minister Narendra Modi had set a target for India to make it into the top 50 list by 2020.
Speaking about India’s improved position in the World Bank's Ease of Doing Business (EODB) ranking, PM Modi said, "Many things are rising while others are falling. Ease of doing business, ease of living, FDI, forest cover, patents, productivity are rising while taxes, tax rates, red-tapism, corruption, cronyism are falling. The corrupts are running for cover."
"I am eager to give you a picture of some positive changes happening in India today. I say this with full confidence, this is the best time to be in India," PM said while speaking at an event, where he outlined various endeavours of the government of India, while making a strong appeal to the business leaders to invest in India saying that this is the best time to be in the country.
"For investment and easy business, come to India. To innovate and starting up, come to India. To experience some of the best tourist sites and warm hospitality of people, come to India. India awaits you with open arms," the Prime Minister told the business community leaders.
India has implemented 13 reforms to improve the EODB standing, which goes a long way towards influencing investors to pour in funds into the country. It also helps international companies identify attractive markets for their expansion.
However there are areas where India still needs to work upon. Some of the areas are those where it becomes very difficult to bring any reforms. For instance, India’s score in the Doing Business 2020 ‘enforcing contracts’ indicator is one of the country’s lowest scores. This is an indicator that looks at commercial disputes and the efficiency of courts. As it is pointed out, in Mumbai it takes three times longer than in other cities of high income economies to solve commercial disputes through courts. So there is a big judicial reform that is required, which though is a bit difficult to achieve. If courts’ processes are made more efficient and if courts are modernized, India could score better on this indicator.
Another area is the land administration system, where India again ranks pretty low but there is a lot of room for improvement. Mumbai in this case scores 14 out of 30, which means that there are a lot of things that can be improved. Delhi's score is even lower, which is 8 out of 30.
The fact however remains that among BRICS nations; India's ranking is still lower than that of China and Russia.
HOW THE INDUSTRY REACTS
George Paul
CEO - MAIT
"MAIT congratulates the Government on India's rank on the Ease of Doing Business moving up by 14 spots in the World Bank's Ease of Doing Business indicator. This has been made possible by several initiatives taken by the Government. One of the outstanding achievements is in the area of Customs Clearance Procedures, that we in the Electronics manufacturing Industry have seen. Another area is the ease & improved accessibility for raising issues and discussions to find solutions.
However, there are a number of areas that the GoI needs to focus on and bring about improvement. Some of these are better coordination between the Central Government and the State Government in execution of policies and preferably offering a single window to the industry, timely reimbursement of refunds under various schemes and thirdly to stop retrospective claims made on industry on the basis of a changed interpretation of guidelines / laws, particularly where the industry has been transparent in their reporting. These will go a long way in increasing the confidence in the industry."
Shashank Dixit
CEO - Deskera
“India has shown consistent growth each year when it comes to World Bank’s ‘Ease of Doing Business’ rankings. The country climbing to the 63rd position this year is a positive sign for the start-up ecosystem. Several initiatives taken by the Government of India such as relaxing norms for obtaining a building permit, electronic submission of documents, etc. will go a long way in boosting the start-up ecosystem and provide a much-needed fillip to India’s GDP growth.”
Jitendra Chaturvedi
Director and Founder - Batooni Mobile Advertising
“The environment for doing business in India has been cohesive for start-ups. With India jumping 14 spots to the 63rd position on the World Bank's ease of doing business ranking, is testament to the fact that the government has been undertaking various initiatives to simplify the process of registrations, licenses and compliance requirement to help start-ups set up business operations in the country with ease. We are positive that with the government’s resilient focus on building a conducive business environment in India, it will further augment in creating a favourable ecosystem for business growth of start-ups and establish India as the favoured investment destination globally.”
Bhavin Turakhia
Founder & CEO - Flock
“India has been consistently moving up the charts when it comes to World Bank’s ‘Ease of Doing Business’ rankings. This is a positive sign from a business standpoint. We welcome the initiatives undertaken by the Government of India in simplifying the process of setting up business operations. The jump in ranking augurs well for the start-up ecosystem and enhances India’s perception as a global business destination. I believe this will go a long way in enabling the country to achieve its goal of becoming a $5 trillion economy by 2025.”
Kishan Jain
Director - Goldmedal Electricals
“The efforts and commitment by the Government of India over the last few years in introducing economic reforms that harness a healthy business environment has resulted in India jumping 14 notches to the 63rd position in World Bank’s ‘Ease of Doing Business’ index. The continued focus on the promotion of ‘Make in India’ and other measures taken to attract foreign investment and boost manufacturing, is showing positive results. This should enable FMEG companies to expand their business further, resulting in the growth of new employment opportunities in the country. We believe all of this would have a positive impact on India’s GDP growth, making India a global business destination.”
Javed Tapia
Founder - Slonkit
“The consistency with which India has been moving up the ranks on World Bank’s ‘Ease of Doing Business’ index is commendable. The 14 notch jump to the 63rd position bears strong testimony to India becoming one of the preferred destinations for business across the globe. This will enhance foreign investments into the country, augment business opportunities and accelerate job creation.”
