The World Bank in association with international finance corporation publishes every year the report of a comparative survey on doing business in 185 countries with reference to issuing of construction permits, registration of property, getting electricity, access to credit, protection of investors, payment of taxes, trading across borders, enforcing contracts and addressing insolvency issues. Both for 2012 and 2013, India was ranked 132 in ease of doing business and as for starting a business, India has slipped into the 173rd position in 2013 from 169 in 2012. In investor protection, it is down to 49 in 2013 from 46 in 2012.
Doing Business sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations. It measures and tracks changes in regulations affecting 11 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and employing workers.
The challenges of launching a business are shown below. Included are: the number of steps entrepreneurs can expect to go through to launch, the time it takes on average, and the cost and minimum capital required as a percentage of gross national income (GNI) per capita.
The total number of procedures required to register a firm. A procedure is defined as any interaction of the company founders with external parties (for example, government agencies, lawyers, auditors or notaries).
The report also shows us the number of steps that an entrepreneur has to pass before getting registered his firm. And it’s almost 12 and the average number of days calculates to almost 27 days!! Compared to other south Asian countries and OECD countries (US, UK, Australia, Japan, etc.), where the number of steps for registering a company are 7 and 5 respectively, average time is 19 and 12 days. This explains the challenges of having an eco-system that supports entrepreneurship. That’s why we are not able to produce entrepreneurs at a young age compared to the Silicon Valley.
Is India an attractive investment destination?
Globally India is viewed as an important market. We are the fourth largest economy after US, China and Japan. One of the attractive emerging markets and second most populous country (large market size) in the world. We have the best skilled man power and high demographic dividend – high youth population. Together this makes India an attractive destination for investments.
What backstabs us?
- Difficulty in starting and running a business – needs an eco-system which supports innovation and encourages startups.
- Efficiency and corruption are a cause of concern. India ranked 94th in Corruption Perception Index ratings out of 176 nations.
- People change their priorities depending on their importance and attitude towards punctuality. This lags the schedule and timely delivery.
- We don’t adhere to rules rather go with the rules and regulations set by us. The entire lacks transparency and clarity.
- Lack of clarity in policies.
Steps in the right direction
- Ministry of Corporate Affairs (MCA) has outlined measures to ensure that entrepreneurs can float a company in 24 hours. Read more here. The measures like this will help to improve the entrepreneurial spirit of the youth as well as the nation.
- Incentives for research and development especially for companies which promote R&D.
- Create an environment for investments.
- Ease of policies and regulations for promoting startups and small businesses.
- Tax benefits and deductions for businesses.
These are some of the small measures from the part of the government to nurture the talent in the right direction. There are a lot of opportunities to be used, but everything matter to the entrepreneurs finally. They need to find out the problem and solve it wisely with a pinch of risk added to it. So take your risks and success will follow you.
“Be hungry, be foolish” – Steve Jobs
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