In terms of bring ease of business, the ranking of India this year's 130th out of 190 countries.

The ranking
shows a fall from the previous year. The current national government in India, when came to power in
2014 rode on the promises of development, especially ease of doing business.

In their manifestoes, the even mentioned this to be their top priority.

Despite these efforts or a lack of efforts India still ranks 130th out of 190 countries in terms of ease of
business. Countries like Indonesia, Pakistan and Brunei made remarkable improvements as mentioned
by the World Bank.

The parameters for determining the rankings for Ease of Doing Business and the current World Bank
Ranking are provided in the screenshot below.

More particularly in the ease of starting a business, India's ranking fell from 155th to 151st. On
construction permits the ranking has stumbled from 184th to 185th. On being taxes India still ranks 172nd
out of 190 countries.

Every year when the World Bank rankings come in there is a urgent need do our bureaucratic overdrive
to improve the rankings. These bureaucratic overdrives lead to ambitious projects like Make in India but
the situation on ground does not change, despite the show business and the brouhaha around ease of
doing business in the fall of rankings show a clear lack of political will and ineffective implementations,
monitoring and checks and balances while India clearly wants to be in the same game as developed
countries still no effort has been made to shed the idiosyncrasies that have long blotted the business
climate of India as corrupt, painful and unfriendly.

To top it all with red tapeism, going for approval from department to department, paying bribes for the
clearances makes the business environment stressful for those who want to do business in India.

According to the rankings of Transparecy International, India ranks 79th out of 176 countries in the
Corruption Perceptions Index.
The government claims that the Parameters is used by World Bank are not accurately capturing the
scenario and extra to India but as the apparently does mentioned above clearly show that the para
meters used by the World Bank are very basic for a business to function in any environment.

Other than the bureaucratic hurdles, construction permits, regulations, licensing there is also time and
again hurdles put forth by labour unions, local legislators, corporators who have a nexus with the
government departments for the aim of harassing small and medium businesses while they run their
operations.

The report further elucidate how the entrepreneurs who want to start a business have to bear with
cumbersome procedures like getting a TAN number, register to pay VAT, bear with high costs of
registration and still do not get timely approval. Above all the lack of transparency and ambiguity in laws
makes it even tougher to deal with government agencies in procedures and approvals. The entrepreneurs
immediately see red tape as part and parcel of doing business. Ideally the cost of corruption should not
even figure out while making business plans and budgets. However, most of the entrepreneurs factor the
cost of red tapeism, government approvals and corruption in their budgets and financial management.

The promises of single window clearances have also fallen flat. Despite of e-governance portals coming
up still the entrepreneurs have to go to physical locations get their approval and licenses. At present there
are multiple registrations that the entrepreneurs have to deal with. The promises of single unique ID has
not been implemented and moreover, a lot of time is spent in procuring multiple IDs like Tax Account
Number (TAN), Permanent Account Number (PAN), VAT registration number and in many cases a bride
has to be paid to procure these registrations.

Even if an entrepreneur procure the registrations, the struggle does not end here, it goes on when the
entrepreneurs have to pay taxes, renew approvals on an yearly basis and spend majority of the time in
paperwork which essentially they should spend in their businesses.

What makes it is more worrisome is that the ranking is consistently falling lower since 2013 even before
the current national government came to power.
The other challenge that the businesses face is land acquisition. The process of land acquisition takes
minimum of 14 months and the maximum cases it takes even longer. In the disturbed areas of India,
especially where there is problem of Naxalism, internal disturbances, the process of land acquisition
becomes even more cumbersome. Organisations doing business in these places not only face corruption
by the government but they also have to pay an amount to the leaders of Naxal areas to prevent them
from destroying their factories by blasting dynamites.
The table below shows the data of India’s rankings in Ease of Doing Business from 2006 to 2017.

There has been a drop of 14 points from 2006 to 2017.

Posted the land acquisition, even if the land is lawfully acquired for the companies, the people who give
up the land are not allotted lands in other locations even though on paper the government shows that the
land has been allotted. Ultimately, the land is acquired but the alternate land is usurped by corrupt
practices.

In the purview of ease of doing business, the particular pinpoint, very specifically mentioned by
entrepreneurs in multiple surveys, is that of starting the business. They believe that the maximum
clearances required to start a business are unnecessary and not reasonable.

Another area to improve is digitisation and technological advancement. A lot of admin formalities till today
happens on paper and whatever formalities happen on computers, their systems are still basic and not
advanced as per the changing times. The lack of improvement on the technological front makes a hurdle,
yet another, in ease of doing business.

The current government also rode to power on promises of digitization. While the government started
making claims of cashless economy, in the meanwhile India had already slipped to the 91 st position in the
readiness of digitized economy as per the Networked Readiness Index .

In the purview of bring ease of business it is not only the technology which is lacking it is also the policies
that need reform. A critical enabler on this front would ease a lot of procedural and admin formalities and
will also save significant costs in money and time that businesses need to incur currently. Building online
platforms and single window clearance systems would do the role of a critical enabler.

There are multiple examples in different pockets in India where single window clearances, online building
plan approval systems, one-stop centre in Punjab and registering a business by E stamping has been
introduced in Delhi.
However, all these initiatives are scattered, they may cater to one small aspect of ease of doing business,
but not in entirety. These initiatives are at the single level in states but not on the National front. Those
businesses which need to operate inter-state do not get much required a smooth facilitation platform.

In India, when a business operates in the state, there are additional taxes over and above the already
imposed direct and indirect taxes such as state tax unique to that particular state.

The lack of alignment between the central government and the State government with respect to policy
puts the businesses especially the one which do not have approaches to the higher authorities in a
difficult position to operate smoothly.

The policies need to be reformed not only at the level of central government but also at the level of state
government and post that the policies must be in alignment. In India, there might be a certain set of rules
that the central government demands to be complied with and a certain set of rules that the State
government demands will be complied with. This makes its come cumbersome and waste human hours
and money for the businesses.

For example, in the total business in one has a Hotel in Delhi , in Jaipur and Bhopal, the hotelier would be
required to do everything from the scratch in all the three cities. There is more system of a centralised law
which would exempt the hotelier from doing duplication of regulations and administrative tasks.

Having a centralised policy, law, regulatory framework for industries established in India would be a great
facilitator in ease of doing business. If after having a centralised law, the particular place has a unique
context, then the state lock and demand additional regulations. But the alignment has not happened yet
on the central and state level in India and due to which the businesses continue to suffer.

Having a single platform based on technology would not only help in reducing the time required for admin
formalities but will also clear the hurdles and obstacles that arise from storage and managing the
paperwork.

The other area where India stands 172nd out of 190 countries is ease of taxation. The company is working
in India face humongous challenges dealing with tax authorities, settling disputes and timely refund of
service tax and availing tax incentives.

A lot of cases of taxation go to courts where the legal battle consume a lot of man-hours. The cases might
go on for years and as it is the justice system in India is slow and is known for the giving late Justice. The
companies who would rather spend their time in growing their businesses and operations and core
products or services spend a lot of time in legal battle.

However there are case studies in India of certain states we are using technology the cost of tax
collection has significantly reduced. In Andhra Pradesh the collection of tax, VAT happens online and the
registration certificates are issued through a software application.

In Karnataka the Geographical Information System collects real-time data on property tax, has an online
property tax calculator and is able to easily search and analysis of property details and tax data.

In Rajasthan, the government has simplified the categorisation of rates, all payments and returns have
been made online compulsive.

Another area which needs reform is contract enforcement. The process of dealing with court proceedings
is often complicated and time consuming and still the outdated laws and regulations have not been
reviewed.
The small and medium businesses do not have the liberty and resources to engage in dispute and courts
because they are short on funds and resources and they would rather spend time in growing their
business than in courts. Therefore they end up paying bribes and negotiate through approaches at the
mercy of lawmakers and government department officials. It has often been seen that in such cases
arbitration has been better than litigation.

By having proper policies in place for contract enforcement, transparency that essentially translates into
having clear policies, no ambiguities would facilitate ease of doing business for short and medium
businesses.

The ambiguity in the law, gives power to the government officials to take decisions as per their
convenience. They might use their power in interpreting the law to harass small and medium businesses
for the purpose of taking bribes. By leaving no room for ambiguity and making the law very very specific
would be really helpful for small and medium businesses. This would also help in enforcement of
contracts and would reduce the huge amount of pressure on courts.

The loss that Indian businesses in God due to unfavourable conditions, very specifically due to an big
was policies, ineffective contract enforcement leads to a loss of 5% to 10% every year. In a KPMG case
study, for a mega thermal power plant, a delay in six months in the project can reduce the IRR by 1% and
a delay of 12 months can reduce the year by 2% which adds a burden of penalty and increase of the
payback period. These losses discourage investors and businessmen to start and expand business
operations in India

The Confederations of Indian Industries (CII) in their report found out four major areas where the
improvements are required to facilitate ease of doing business.

The improvement areas are:

1. Land Acquisition
2. Starting a business
3. Taxation
4. Contract Enforcement

The screenshot on the next page from CII website shows their recommendations on facilitating ease of
doing business in India.
The export scenario in India, is doing well despite the barriers to entry and exit, rules and regulations and
administrative formalities. Pre-1991, error before liberalisation happened, there were a lot of restrictions
on getting licenses for export. Post 1991, Manmohan Singh led Ministry of Finance to liberalise a lot of
regulations, but still compared to other countries where are the ease of doing business is highest like
music land, Finland, Norway, Denmark, Singapore the restrictions and licensing is still a lot more
cumbersome compared to the countries mentioned above.

But still, India stands 19th in the global ranking for exports and the total share of world exports of India is
still close to 2% despite being pegged as one of the most rapidly growing economies of the world.

The balance of trade in India still goes on negative. India imposes a heavy import tax, restrictions and
duties to import a particular group of products. While the exports under a more liberal than imports, still
the balance of trade has been negative since many years. As an economy, we are still not self-sufficient
in the manufacturing and tertiary sector. The table below shows India’s balance of trade of the past few
years.
The last 10 years of data shows, the balance of trade being always negative, with 2005 as the most
favourable balance of trade and 2012 as the most negative balance of trade. The situation you’re on your
has improved, but the gap in imports and exports are still a whooping US$ 124.83 billion.

A gap of US$ 124.83 billion, despite being liberal on exports and very conservative on imports show that
the exports need to be liberalised even further. There should be more tax refunds, tax incentives and
rewards for exporting goods and services outside India. Only then, when the exporters will have more
incentives and lesser administration, easy regulations, will the export table will go up, thereby reducing
the negative balance of trade.

India has an advantage of having a large workforce and cheap labour. The manufacturing sector in India
has not reached its full potential because of not having structured labour laws. The barrier to entry and
exit in manufacturing are very high and the cost of acquiring capital also sometimes exceeds the capacity
for having a long gestation period. While the local manufacturing has developed over the years to cater to
domestic demands, the manufacturing to produce goods at a mass scale eligible for exports has
remained somewhat stagnant.

The manufacturing industry, needs a bigger boost with easy procurement of loans, acquisition of land, the
regulation of unnecessary licenses, uniform labour laws and a reform in the complicated tax regime.

With the boost in manufacturing industry and producing goods in bulk and a huge volume will give the
benefits of economies of scale, cheaper products and export was the goods and services.

The table below clearly shows that India has not achieved a remarkable, steady, year on year growth in
export of manufactured goods.

The lack of growth rate in export of manufactured goods has been the cause of the reasons cited above.
With policy regulation and liberalisation is of rules and regulations, India has a potential to exponentially
grow in export of manufactured goods.

The special attention to make improvement in this arena would need to be given to easy procurement of
capital and loans, removing the barriers to entry and exit just like in countries like Singapore, Norway,
Finland, Sweden, Denmark where there is maximum ease of doing business. The same parameters
would apply here as well