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Unease of doing business in India
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Bikky Khosla | 28 Oct, 2014
Our business ecosystem has always remained prey to regulatory hurdles. In India, it requires an entrepreneur to comply with 12 procedures and wait on average 27 days only to start a business. In the eyes of foreign investors, the image is no less worse. Year after year, we are scoring poorly in the World Bank's Ease of Doing Business report but even now hardly any serious thought has been given for changing the situation. Compared to this prolonged period of inaction, some recent developments seem like rapid progress, however.
Last week, I discussed some newly introduced labour reform measures by the government, and now another piece of good news is that the coming days may see an upswing of business regulatory reforms. The media has reported that the new government wants to improve India's ranking in the ease of doing business index to 50th position in the next two years. At present, India ranks 134th and in some areas we are performing even worse than countries like Nepal, Bangladesh and Pakistan.
Let's have a look at how pathetic the situation is. According to the World Bank report, in India dealing with construction permits involves 35 procedures and a 168-day waiting period, getting electricity involves 7 procedures and a 67-day waiting period, registering property requires 5 procedures and a 44-day waiting period, and for resolving insolvency it requires a company to wait 4.3 years. When it comes to export, it requires on average 16 days and 9 types of document while to import it requires 11 types of document and a 20-day waiting time.
Needless to say, the faster our businesses get rid of this regulatory burden the better it is. Recently, the Department of Industrial Policy and Promotion came out with a report on the issue. It includes some valuable suggestions, including reduction in business registration time to one day, removal of minimum paid up capital for start-ups, introduction of Bankruptcy Law and Unified Insolvency Code, reduction in number of taxes and permitting on-line payment of taxes, implementation of DTC and GST, abolition of minimum alternate tax for SEZ units, single registration for VAT and other state taxes, combined application form and single window clearance, etc. These measures are worth considering.
I think the government should also try to pick up suggestions directly from the industry players from different sectors, with special focus on micro, small and medium enterprises. In addition, our industry associations should come forward with concrete and feasible suggestions to improve the business environment. At the same time, special attention should be given to simplify the loan disbursal procedure, bring down the interest rates for MSMEs and initiate a financial inclusion drive for the sector.
I invite your opinions.
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SEE ALSO
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SME WISHLIST
Ramesh | Thu Nov 6 13:52:56 2014
Sir,
Can you create a page for SME wishlist for the next budget, which can be forwarded to the FM. Where the SMEs can give simple suggest which can make it easy to do business in INDIA.
For example :
1)Abolish SERVICE TAX on GOODS and TRANSPORT SERVICES "RECEIVED", where a manufacturers who does not sell any services has to take SERVICE TAX number, pay quarterly challans and half yearly returns.
2)Increase the depreciation on capital goods back to 20 or 25%, against present 15%, which will make investing capital in the business worthwhile.
3)Option of filing TDS RETURNS annualy, for SMEs.
4)Merging ELECTRICAL INSPECTION OF FACTORIES, with FACTORY INSPECTION.
5)Make EXCISE and SERVICE TAX to 12.36% single slab, as agaist 3 slabs of 12% 2% 1% currently, where we have to round off pennies. There will be no revenue loss to the department.
6)Abolish the C FORMS, as they are generated by the department, downloaded by the assesse and again submitted to the department, dont know what purpose is served here.
Thanks!
Unease of doing business in India
Mahaveer Bhandari | Thu Nov 6 11:18:58 2014
Apart from what you have listed, there are number of other local and central regulation like,
Professional tax, Trade licence, Weights & measure licence,Muncipal corporation licence, shop & establishment licence etc. and these vary in numbers based on each states requirement.
A new start-up business by youngster will feel annoyed as to hasten the process the kick-back to the concerned department is a must.
Politics
Bala Advocate | Fri Oct 31 05:23:26 2014
powerful politician with money alone can do business, that kind - law framers frames many laws, to destroy youngsters in India. for this government has to take steps how to clear it but politician they dont know even though we suggested they kept us in dustbin.
No one can save India
Dr Sanjiv Kumar | Thu Oct 30 04:09:02 2014
No one can save India. Nehru ensured we will be slaves forever, either to foreigner rulers or to our own rulers who have replaced royalty with politicians and bureaucrats. If one wants to be happy in life, unfortunately you have either to live deep in corruption or to leave mother India. Modi is not going to do anything to change this.
ease of doing business
Jayesh Khimji Rambhia | Thu Oct 30 02:33:07 2014
1. Govt should make officers responsible for their actions or inactions.
In China officer appointed to help industry , fills the forms needed to get industry started and sees to it that entrepreneur gets all permission needed to start industry in time. This is part of his job description and appraisal for promotion.
Whole mindset needs to change from govt being controller to it being facilitator.
For that it needs to trust entrepreneur.
entrepreneur needs to be considered innocent unless proved guilty.
Black ships needs to be punished with fast track courts.
officer initiating proceeding and if entrepreneur is found innocent ,all legal expenses incurred by entrepreneur needs to be paid from officers salary.
2.entrepreneur generating jobs, paying taxes ,earning forex for over 5 years should be given status like gazetted officer.He should be honored ,respected and trusted.
depending on scale he can be given incentives like municipal councilor or MLA Or MP.
Politicians and officers enjoy all.benefits at cost of taxpayers.they get healthcare , pension. Etc.
taxpayer should himself get such benefits from govt.
Packaged Drinking Water
Biswanath Bose | Wed Oct 29 19:43:41 2014
I agree with the Article Heading and wished to add our experience. We are on of the manufacturer of Packaged Drinking Water/BIS Approved in West Bengal. As a new company we have noticed that when we need to buy raw materials they charge 5% VAT but we need to add 14.5% VAT, nearly 10% extra. Presently Bottled Water is NOT a Luxuriant as Govt. wants to earn more tax on this. As a result only branded products can survive to force their CNF/Super Stockiest to buy the product with VAT. New Company like us can only suffer because CNF/Super Stockiest will push us to sell without VAT. CNF/Super Stockiest are the main gainer and Industry is the Most Sufferer, who generates the employment. If VAT is same 5% on water manufacturer and Bottle Manufacturer then we can also sale product with proper invoice with VAT. Universal VAT should be applicable for INDIA from raw material to finish product then Govt. earning will also be increased, people will not hide their sale. BANKs also needs to be more reasonable to New MSMEs until the Brand or Business stands on their own feet.
GOVT. of INDIA really needs to take care of MSME, who generates the most employment out of individuals Entrepreneurship dream.
India, Oh, they are so slow...
Anand Pherwani | Wed Oct 29 17:40:49 2014
We are based in the US and are trying to market our parent company's products as well as help other Indian companies export to US. We are facing this response from the customers to whom we are trying to sell the idea to buy from India: "You want us to buy from India; Oh, you give them a order, there is no response, no commitment to deliveries, it takes forever to ship from India, they are so slow!!!" Instead our customers prefer to source from China...
unease of doing business in India
R.H.Afzal Khan | Wed Oct 29 16:24:21 2014
Sirs,
It may be due to many cumbersome procedures, rules and regulations high cost of Registrations of Trade Marks,competitions from big players no proper guidance to cottage, tiny small industries in start ups, financing,manufacturing and marketting etc. Any persons wants to start business in India should be helped and fully supported by various departments right from start to finish. Many bright mindes are here but without help and support if they are properly and fully supported they can create number of employment opportunites more business can be generated. What everybody want is Easy accessability in all places and instant availability of support from the departments.
I am in perfumes having much knowledge of perfumes willing to make oil based double Blended Perfumes longer hours guarenteed, Sprays, A/c Centralised Plants Perfumes 1st time, Car perfumes, Air Freshners,
different types of Paper Soaps, Dhoops Sticks, Dhoop powders, Scented Bags in different sizes etc. All are having good market demand in India and Abroad. It can create hundreds of employment opportunities and will generate more revenue. Those interested in the field of perfumery business are most welcome.
New business
John Jeapes | Wed Oct 29 14:57:35 2014
I have been trying for several years to find an Indian Business interested in developing a new sport without the courtesy of a reply. Clearly Indian industry players have no interest in looking at and debloping new ideas.
Stupid at the top
Richard | Wed Oct 29 11:34:01 2014
Every government steals money.
The Indian government thinks if it eats 3/4 of the pie everything is fine
But the 1/4 pie is not enough for most businesses
Look at China. It steals but it steals 1/4 of the pie and their business grow in leaps and bounds
On China is still stealing its 1/4 but the pie is so huge the take is 3/4 3/4 or twice as big as what an Indian government thief steals.
Just too stupid for words.
Plenty of education, defective reasoning.
Procedure for starting services for Lift maintenance
Nilesh | Wed Oct 29 10:47:02 2014
Article is so informative for me. I would like to start my business for "lift maintenance" in buildings as well as used in industries offices buildings Please suggest me step by step, what are the legalities have to be followed?
Nilesh
Mechanical Engineer
9879103300
New Zealand company feedback
Maurice Purdy | Wed Oct 29 05:24:57 2014
We are a New Zealand company who have set up a manufacturing agreement with a company in Maharashtra to manufacture our Purform brand of mannequins.
We are also in the process of setting up our own company who will handle all sales for the Indian market, unfortunately it has taken almost 3 months to get this established and we are still awaiting what we believe is the final requirement being our VAT registration a nightmare!
When we compare this to New Zealand where it takes approximately two weeks to become operational it might pay for the lovely Mr Modi to send his team out here to see how its done!
In saying that Im sure they know what needs to be done, the biggest hurdle I believe would be dismantling the bureaucracy that has built up over the many years of incompetence.
When they do fix it, it will only make India an even better place to do business.
Make India business friendly
Devendra Nath Varma | Wed Oct 29 04:50:44 2014
If all the hurdles that discourage business are removed by Modi Sarkar, then all foreign entrepreneurs, including NRIS ans PIOS, will rush in and India can aspire to become the leading industrial and trading nation. Entrepreneurs cannot afford to waste time, dead time. They move away to other more business friendly countries.
Loan to MSMEs
AKJ | Wed Oct 29 03:31:13 2014
I agree with you that low interest loan disbursal procedure should be simplified for MSMEs and initiate a financial inclusion drive for the sector. Without banks' initiations "Make in India" theme would be a failure for MSMEs. We lack low cost infrastructure, electricity, finance & fast procedures at all Government's departments.
Establishing an industry
jayakumar | Wed Oct 29 01:59:32 2014
I wanted to start a vegetable oil Industry in Bhiwandi, Maharashtra. I went through all procedure. I applied for MPCB consent to establish. All documents are correct and have no problem. I had applied on 1st Aug. 2014 but so far it is not yet finished. It is all because i refused to corrupt the officials. More shocking is that field officer asking me blatantly that I have to pay up Rs.25000/- to get the consent in 3 days. There si no process of redressal of grievances. I had also sent an interaction to Hon. PM. Mr Modi. But it seems it is one sided. I did not get any reply. The other day some one asked in this how the dream of Make in India will come true.
MSME
Meena Misra | Wed Oct 29 01:32:21 2014
There should be single window system for all Small , Micro n Medium enterprises and lesser interest rates.
Prevent labour blackmailing
Anjum Padyal | Wed Oct 29 01:29:23 2014
There is also a need to reform labour laws.These days instead of employer the labour is blackmailing and harassing the organisation.These incidents are very harmful for any industry.
It is much more easier in Dubai
Dr B N Rajan | Wed Oct 29 01:26:03 2014
I was an entrepreneur in Dubai since 2004 till the peak of global meltdown in 2010. I had no problems to start and establish the company, all it took was to move from one physical window to 3 more windows for the documentation clearance at Dubai. It took me just about 17 minutes to open up my LLC company in which I traded about 100 crores during my operating period. When the recession was at worse, I closed down my show in Dubai and moved to India hoping for a business future.
Just to get a VAT registration, I spent 45 days and lucrative money to the authorities. I then ordered couple of moulds from China through my IEC. The whole process of mould import, from concept to completion, took place in about 14 months.
The pity was, the commercial tax department could not understand why I did not transact my business. They forced me to close the VAT account. They failed to understand that this is a chicken or egg situation. I should have a valid VAT for submission to customs authority or DGFT for getting IEC.
Anyhow, after the receipt of my moulds worth Rs 30 lakhs, I needed to reimburse my customs duty back, for which I had to file with VAT number. Now that the Commercial Tax Dept has closed my account, I am run into confusions.
I never had any problem in operating my business in Dubai as well in USA.
But when it comes to India, it scares me a lot as to whom am I accountable? to the business or bureaucrats or Govt or the red tapes?
God Please save India from the monster
India quality and supply, Taiwan preferred
Bill | Tue Oct 28 23:23:48 2014
We have a small importing business in California for motorcycle parts. Repeated attempts to use Indian vendors have resulted in horrible quality issues as well as many year wait times, lies and outright fraud.We have been forced to Taiwan to make parts. A real pity.
The Indian post office- How pathetic it is? Export sample from India? Impossible
Dilip Jhaveri | Tue Oct 28 19:41:07 2014
I sent some sample blank labels by PriorityMail. Spent $25 for an item not even $2. It was never delivered even after 3 months. Sent a check (deposit only) by airmail. that just got lost too. Export sample from India? Impossible. I receive Chinese Items by cheap First Class to Chicago and are never lost. Send items to China? No problem.
Bureaucrats' unfavourable attitude
Niky Kotian | Tue Oct 28 19:19:13 2014
Our bureaucrats are conditioned to think that all businessmen are crooks unless anyone of them proves himself innocent !
All our systems and procedures are designed with this thinking !
Protect SME interest in cities
Kutbi Lukhadia | Tue Oct 28 18:42:22 2014
Small scale industries are being kicked out of cities without any resettlement plan . Entire manufacturing ecosystem cannot be setup in villages overnight. Skilled labor and clients don't want to work in difficult village infrastructure even if you declare them SEZ. Make in India will be a success only if small and micro industries are protected within cities .
No registration zones
Shashi Bhushan | Tue Oct 28 17:08:32 2014
And gov't should also consider making SEZ as regulation free zones on a pilot project basis. Businesses in SEZ must get revenue related registration like taxes etc. Why businesses need registration.
Further, it seems that the average time for construction permit is a year, no less. Why planning permission at all is required. Why cannot gov't ask a licenced architects to certify that a building fulfills regulatory requirements ie a self certification. Only role gov't should play is that of master planner and landscaping of a city. The gov't should do its citizens service by planning cities and it's infrastructure. Crucial resources are wasted in checking drawings and delaying construction, which frustrates investors.
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Re: No registration zones
PC Acharya | Wed Oct 29 17:14:04 2014
Very good point. The govt should stop wasting time and permit self authorization by the architect, who will be responsible for any design or planning fault. But sadly, the current practice is only a way to corruption.
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Corruption
Syed M | Tue Oct 28 16:55:11 2014
Well said Bikki. Also the unfortunate part of a semi corrupt system I must point out. The rates are fixed. We need the young generation to take over and cleanse the system from inside out. At the same time we should salute the sincere and hard working lot who are still serving us, untainted. Hoping our beloved PM will look into these matters and make doing business in and with India a good experience. I'm positive.
Another obstacle VISA
GR | Tue Oct 28 15:07:08 2014
Entry into India from countries served by a recent Visa processor in USA and Canada.It used to take a day to get a simple tourist visa. I did get a business visa years ago direct from Consulate in a day. Now it take close to a month with a need to be checking constant so the papers and passport is not lost.This is my 5th visa to India. I am assured delivery today. Shall see. To further increase tension is statement on web page visas can be denied without explanation.
Once I get my passport back I then can book flight.How can business people make concrete plans with a situation like this?
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