Ease of Doing Business (EODB) in India: India on Course For a Big Leap as Top Investment Destination in the World

Ease of Doing Business (EODB) is a research-based annual report which is funded by World Bank. Its aim is to assign a single index value to each country on how easy is it to setup and do business in that particular country. This value of the index is based on 10 key business-related parameters and helps in ranking the countries on EODB. The Doing Business report along with rankings of each country is published every year. The 10 parameters considered for determining EODB index are:

  1. Starting a business,
  2. Dealing with construction permits,
  3. Getting electricity,
  4. Registering property,
  5. Getting credit,
  6. Protecting minority investors,
  7. Paying taxes,
  8. Trading across borders,
  9. Enforcing contracts
  10. Resolving insolvency and

 

This report serves as handy reference guide for investors – Foreign Direct Investors (FDI) and Foreign Institutional Investor (FII) worldwide who wish to invest their money and are looking at avenues in emerging markets for huge investment. It gives the investors an insight into the regulations setup by the country on starting and running a business. These regulations indicate the level of bureaucracy, red-tapeism, paper-work, permission windows and legalities as a part of business environment in that country. World over investment institutions, bankers and companies have started relying heavily on EODB index to decide on where to park their funds. This can be judged from the fact that in an interview on 02 June, 2017, Mark Mobius, Executive Chairman, Templeton Emerging Markets Group, Franklin Templeton Investments, was categoric in stating “India’s inability to pass Ease of Doing Business reforms is a big risk. India will have to cut down on bureaucracy, make things a lot more efficient, and easier for entrepreneurs to open their own businesses, as well as free up foreign investment, if it wants to address the critical issue of creating more jobs.”  

 

In the 2017 Ease of Doing Business report, India has been ranked at 130th position, which is the same as 2016 and 12 positions better than 2015 (India’s EODB 2015 rank – 142). In the year 2014, India was ranked 134 amongst the 190 countries that were surveyed for Ease of Doing. This is when the government, led by Shri Narendra Modi, understanding the merits of EODB, laid out a plan to improve the rating and work on each of the parameters that governs the rating. It was realized that the overall business environment within India needs to improve and for this to happen each state had to create a business-friendly environment. Department of Industry Policy and Promotion (DIPP) under the aegis of Ministry of Commerce and Industry has been tasked to design, facilitate, implement and monitor the policies around EODB.

 

As per our Hon’ble Prime Minister Mr. Narendra Modi, Government of India has taken 7,000 reforms for ease of business and minimum government, maximum governance.

 

Details of EODB with respect to each state of India can be found at the following weblink http://eodb.dipp.gov.in. This portal contains a dashboard which provides a real time snapshot of ranking and tracking of States and UTs based on the implementation of Business Reform Action Plan (BRAP) recommendations. This year (2017) DIPP, in partnership with World Bank, has formulated a BRAP consisting of 405 business process reforms that each State and Union Territory (UT) needs to implement (readers can view DIPP issued BRAP at http://eodb.dipp.gov.in). States and UTs have been given a deadline of 31st October, 2017 to implement these reforms and submit the evidence of implementation to DIPP. These reforms encompass vast gamut of business regulatory processes, policies, practices or procedures such as availability of land, getting electricity connection, system of construction, single window clearance of applications, labour regulation, registration of property, pendency of cases and many more. This enables each State and UT of India to be individually ranked on Ease of Doing business each year. In the latest EODB Reform Rankings for 2016 (covering a period from 1st July 2015 to 30th June 2016) as announced by Commerce and Industry minister Nirmala Sitharaman, Telanga alongwith Andhra Pradesh have been jointly ranked first, amongst all the States & UTs in India, on the basis of 340-point business reform action plan.  

 

As a political, economic, and business aficionado, I would not hesitate in saying that Ease of Doing Business is one of the most important objective focused by the Indian Government and is crucial to the success of various initiatives such as Make in India, Start-up India, Digital India, Employment and many more. To attract large number of investors, it is important to make India an investor-friendly destination. The results of the efforts made since 2014 have started showing positive result as India has displaced China to take the top position amongst top 30 developing nation in Global Retail Development Index (GRDI) as per rankings released on 5th June 2017. This translates to the fact that now India is considered as the top investment destination in the Retail sector globally. It is a heartening news as this will help in getting more FDIs, create more jobs and entrepreneurs directly supporting Make in India and Skill India initiatives, being successfully run by the government.

As per DIPP secretary Ramesh Abhishek, government has laid out a very progressive framework which will enable India to achieve a very challenging and ambitious targets of leaping ahead 40 places to 90th rank in 2017-2018 and subsequently to 30th rank by 2020. He was very positive while stating “These targets are feasible. We are hoping to do extremely well in five categories: starting a business, construction permits, paying taxes, trading across borders, and resolving insolvency. We are already in the top 50 in three parameters out of 10. We are facing challenges in two criteria: enforcing contracts and registering property because of the complexity involved”.  

 

To conclude, as a business expert with acute finance acumen, I would like to share my viewpoint with my avid readers that the government has laid a very solid foundation to improve the business environment at Central and State level through BRAP. States have been responding well by confirming the implementation of BRAP agenda points. However, it is not easy for age-old procedures and processes to die away and change the mind set of Indian government functionaries. If the Central and State governments can sustain the momentum and resolve within themselves to shift the age-old paradigms of the implementing policies and procedures, it is just a matter of time that we will witness emergence ofNew & business-friendly India’ with budding energetic entrepreneurs and investors from across the world lining up to invest in India.

 

CA Sunil Kumar Gupta

Business Expert, Economist, Author & Philanthropist

www.sunilkumargupta.com

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