As per reports, India has jumped up 79 positions in World Bank’s Doing Business rankings, improving from 142 in 2014 to 63 in 2019. In fact, it has progressed on seven out of the 10 parameters. Goods and service tax (GST) and the Insolvency and Bankruptcy Code (IBC) top the list of reforms that have propelled India’s rise in rankings.
However, it continues to trail in parameters such as Ease of Starting Business (rank 136), Registering Property (rank 154), Paying Taxes (rank 115), and Enforcing Contracts (rank 163).
The number of procedures required to set up a business in India,
for example, has reduced from 13 to 10 over the past ten years. Now it takes an
average of 18 days to set up a business in India, down from 30 days in 2009.
The services sector too faces many regulatory hurdles even
for routine businesses. The bars and restaurants sector is an important source
of employment and growth everywhere in the world. It is also a business that,
by its nature, faces a high frequency of starting new businesses and shutting
old ones. A survey showed that the
number of licenses required to open a restaurant in India are significantly
more than elsewhere, which need to be improved.
Construction permits
India has considerably improved the process to obtain
construction permits over the last five years. Compared to 2014, when it took
approximately 186 days and 28.2 per cent of the warehouse cost; in 2019 it
takes 98-113.5 days and 2.8-5.4 per cent of the warehouse cost.
Trading across borders
While the government has already reduced procedural and
documentation requirements considerably, increasing digitalization and
seamlessly integrating multiple agencies onto a single digital platform can
further reduce these procedural inefficiencies significantly and improve user
experience substantially.
The turnaround time of ships in India has been on a
continuous decline, almost halving from 4.67 days in 2010-11 to 2.48 days in
2018-19. This shows that achieving significant efficiency gains in the case of
sea ports is possible. The simplification of the Ease of Doing Business
landscape of individual sectors such as tourism or manufacturing, however,
requires a more targeted approach that maps out the regulatory and process
bottlenecks for each segment. Once the process map has been done, the
correction can be done at the appropriate level of government – central, state
or municipal.
Setting up and operating services or manufacturing business
in India faces a maze of laws, rules and regulations. Many of these are local
requirements, such as burdensome documentation for police clearance to open a
restaurant. This must be cleaned up and rationalized one segment at a time. Enforcing
a contract in India takes on average 1,445 days in India compared to just 216
days in New Zealand, and 496 days in China. Paying taxes takes up more than 250
hours in India compared to 140 hours in New Zealand, 138 in China and 191 in
Indonesia. These parameters provide a measure of the scope for improvement.