India hits 100 in ease of doing business ranking: Really? Why some entrepreneurs are surprised
Many feel it is indeed relatively easy to do business in the country now, there are complicated rules and regulations that need to be eased up further
Reforms in access to credit, power supplies and protection of minority investors have helped India ace 30 places to reach 100th place on the World Bank’s ranking of countries by Ease of Doing Business for 2018. This is for the first time the country is surging to this spot. It has brought much cheer to the reform process undertaken by the government with Prime Minister Narendra Modi terming it a 'historic jump', but has evoked severe criticism from other quarters.
However, the question to ask is has it become considerably easy to do business in India?
"Really?" asked a startup investor, when told of India's 30-spot jump in rankings. Clearly, the investor was not convinced. And there are many who share the investor's incredulity. However, they vouch that it is 'better' than earlier. There are some challenges that remain and these are irritants, say experts that derail businesses:
1)Bring down processes of incorporating companies to a shorter time: Though it is exciting to see India climbing up this list and finally getting to the top 100, the trickle down of benefits on a day-to-day basis is what industry would like to see, says Aditi Shrivastava, co-founder, Pocket Aces - a digital entertainment startup. Starting up is still a nightmare, she says. "When we incorporated Pocket Aces, it took us more than a month of hard work and running around for all the paperwork. We would love to see this process brought down to less than a week if possible," says Shrivastava.
2) Improve vital parameters like enforcing contracts: India has always been a preferred destination for doing business because of the vast size of the market it offers, says Naveen Wadhwa, DGM, Taxmann.com. He says the sudden spurt in its global ranking in ease of doing business will boost the government's ‘Make in India’ scheme. In spite of improvement in certain parameters, India still needs to improve its vital parameters like enforcing contracts and registering property.
3) Ease complicated rules and regulations: Though the country has jumped 30 places to reach the top 100, Aakrit Vaish, co-founder & CEO, Haptik - a mobile personal assistant service that aims to solve user issues using the messaging channel of communication - says, he would rank it differently. "I'd say we are still among the bottom 20 percent when it comes to ease of doing business in any country." Vaish says that though rules are needed to curb corruption, he hopes it will get better.
4) Change archaic rules on audit: There are some archaic laws we still have to comply with, for example - maintaining hard copies of expense reports and invoices, said a startup founder. Such laws not only waste paper, but also utilise a lot of extra manpower and space, the founder says. "The government needs to move towards a more tech-friendly system for this as well, which will increase efficiency tremendously," she said.
5) Make it simpler to shut down firms: The time taken to start up a company has come down, says Paula Mariwala, Partner, Seedfund and Co-Founder, Stanford Angels. But shutting down is still cumbersome, she says. "I have a few companies in my portfolio that I want to shut down. But it still remains a long-winding process. It takes over a month to finish the paperwork. In some cases, one has to go to court too. Why can't this be made simpler," asks Mariwala.
6) Whither Rs 10,000 cr budget for startups: "We have been hearing of the Rs 10,000 crore fund for startups in the last two budgets - it would be great to see that implemented and in action soon," said Shrivastava of Pocket Aces. The government can bring about favourable taxation for startups, create separate legal systems to resolve dispute cases for small and medium enterprises (SMEs), reducing the time it takes to get bank loans, among other things, she said.
However, that India has spring boarded to the 100-mark from 130 last year is no mean feat and many in the corporate sector put these down to improvements in processes.
The incremental improvement, which stands out as the most impressive among all major countries is primarily driven by construction of insolvency architecture, leveraging digitisation and legal framework for improving tax payments and credit availability, reducing time and cost overruns for construction permits, protection of minority investors, said Rana Kapoor, MD & CEO, Yes Bank.
According to Manish B Agarwal, Partner and Leader, Infrastructure, PwC India, the improved investment climate will give an impetus to several economic corridors that are ready for investors. “Process improvements at some ports have significantly reduced time with measures like direct port delivery, additional land area for containers, and reduced documentation requirements,” Agarwal said.
Meanwhile, Asish Mohapatra, CEO and co-founder, OfBusiness, a technology-driven financing platform, said start-ups and small enterprises are finding significant difference in processes.
"For start-ups and small enterprises, this has to be the most significant event dawning acchhe din. Unlike many other initiatives, we see the results on the ground. Not only are permits, licenses and related items much more transparent but there is a distinct change in the behavior of officials, " said Mohapatra, who is a venture capitalist-turned-entrepreneur.
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