27 Sep 2022
For any developing or developed economy, the key to entrepreneurship, innovation or wealth creation lies in the ease of doing business in that country. In the recent years, India has emerged as one of the most attractive destinations, not only for investments, but also for doing business.
The country has risen significantly in the Ease of Doing Business (EoDB) rankings, making it one of the top performers on a global platform. Out of 190 countries, the nation’s ranking in the World Bank’s Doing Business Report improved from the 142nd position in 2015 to the 63rd position in 2020.
As per IMD’s World Competitiveness Rankings (2021), among 64 countries, India ranked 49th, 46th and 32nd, in terms of infrastructure, Government efficiency and business efficiency, respectively. Talking about overall competitiveness, according to the Global Competitiveness Report 2019, compiled by the World Economic Forum for 141 economies, India secured a rank of 68.
As per the Doing Business Report 2020, published by the World Bank, India ranked 63rd out of 190 economies in the overall doing business, securing a place among the top 50 nations in 6 out of 10 indicators of the report. The Corruption Perception index (CPI) 2021, published by the Transparency International, ranked India 85th among 180 countries.
To climb further up the ladder, the significant momentum in the investment environment must be attained. This includes continued focus on continuing reduction in regulatory compliance burden, decriminalization of business laws, continuous reduction in cost of doing business, use of technology to lead the improvement in various areas of doing business and providing state-of-the-art infrastructure in line with international best practices to businesses. There should be greater emphasis on enhanced use of technology to facilitate transparency, speed and efficiency in procedural as well as approval processes.
Micro, Small, and Medium Enterprises (MSMEs) make an enormous contribution to the Indian economy. The adoption of digitization, availability of information on business procedures and compliances, processes and procedures for starting a business, adequate power supply availability, and the process of tax registration and compliance are the main parameters for EODB in MSMEs.
To ensure that the country continuously climbs the EoDB rankings, challenges lying in the starting, operating and exiting of a business must be addressed. Certain indicators which require focus include easing the process of approvals and renewals, land acquisition and registering property, trading across borders, paying taxes, construction permits, inspections, enforcing contracts, resolving insolvency, regulatory compliance burden and cost of doing business.
Improvement in EODB has been one of the focus areas for the Indian Government. The Department for Promotion of Industry and Internal Trade (DPIIT), in coordination with Central Ministries/Departments, States and Union Territories (UTs), has spearheaded various reforms to improve business regulatory environment in the country, along with a dynamic reform exercise called Business Reforms Action Plan, which ranks all the States and UTs in the country based on designated reform parameters.
The Confederation of Indian Industry (CII) has been working closely with the Government of India, especially Department for Promotion of Industry and Internal Trade (DPIIT), and various state governments for sustained improvement in the business environment. CII’s key focus areas on EoDB include collaboration with central and state governments to improve EoDB, assessing and monitoring the progress of business reforms, creating a strong outreach campaign to invite feedback from industry, capacity building of state governments in EoDB and providing a mechanism for regular interface and feedback for industry’s views and recommendations.
Moving forward, the Government should primely focus on the effective delivery of benefits to the industry. The significant improvement in EoDB will certainly go a long way in improving the global competitiveness of the Indian industry and further expand India’s chances of attracting more foreign investment.