India’s Significant Leap in ‘Ease of Doing Business’ Ranking
In 2019, India took a leap forward in its global business reputation by rising 23 places to secure the 77th rank in World Bank’s ‘Ease of Doing Business’ report. The list was topped by New Zealand, with Singapore, Denmark, and Hong Kong following close behind from a total of 190 countries. Interestingly, only India and Djibouti made it to the list of top 10 improvers for two consecutive years. This achievement is even more noteworthy as India is the only large economy to have made such a considerable move.
Improvements and Achievements
According to the report, India improved its rank in six out of ten indicators and moved closer to international best practices (Distance to Frontier score) on seven out of the ten indicators. Most notably, India registered significant improvements in the ‘Construction Permits’ and ‘Trading across Borders’ indicators.
In terms of granting construction permits, India’s rank skyrocketed from 181 in 2017 to 52 in 2018 – a substantial advancement of 129 ranks within a year. With regard to ‘Trading across Borders’, India ascended 66 positions by moving from 146 in 2017 to 80 in 2018. In the previous report from 2018, India had already surged forward by 30 places, entering the top 100 rankings among 190 countries.
Key Initiatives for Improvement in Doing Business
Several measures have been implemented which contributed to India’s improved ranking:
Starting a Business:
The process of starting a business has been simplified by integrating multiple application forms into a general incorporation form, replacing the value-added tax with GST for a faster registration process, and abolishing site inspections for registering companies under the Shops and Establishments Act in Mumbai.
Dealing with Construction Permits:
The process of obtaining a building permit has been streamlined, making it cheaper and faster to get a construction permit. In addition, the building quality control has been enhanced by implementing decennial liability and insurance.
Getting Electricity:
In Delhi, the Electricity Regulatory Commission reduced the charges for low voltage connections, and also cut down the time it takes for utility to carry out external connection works.
Getting Credit:
Access to credit was strengthened by amending the insolvency law. Now, secured creditors are given absolute priority over other claims within insolvency proceedings.
Paying Taxes:
The payment of taxes is now easier due to the replacement of various indirect taxes with a single indirect tax – the GST. Furthermore, paying taxes has become less costly due to the reduction of the corporate income tax rate and the employees’ provident funds scheme rate paid by employers.
Trading across Borders:
The cost and time to export and import have been reduced through several initiatives, including electronic sealing of containers, upgrading of port infrastructure, and allowing electronic submission of supporting documents with digital signatures.
| Key Initiatives | Improvements |
|---|---|
| Starting a Business | Integrated multiple application forms into a general incorporation form |
| Dealing with Construction Permits | Made it cheaper and faster to obtain a construction permit |
| Getting Electricity | Reduced charges for low voltage connections |
| Getting Credit | Amended the insolvency law to give secured creditors absolute priority |
| Paying Taxes | Replaced various indirect taxes with a single indirect tax – GST |
| Trading across Borders | Reduced the cost and time to export and import |
Challenges
Despite these notable improvements, India still faces significant challenges, particularly in enforcing contracts and registering properties due to their inherent complexities. Efforts have been made by the Central Government and state governments of Delhi and Maharashtra to address these issues through legislation and digitization of land records. However, more needs to be done as lack of transparency, convoluted clearances, and policy direction uncertainty continue to hinder ease of doing business in India.
Looking Forward
India’s recent leaps in global business rankings present unique opportunities for both local and international businesses. The improved rankings and awareness about business opportunities in India are likely to attract foreign investors and bring advanced technologies into the country. Further reforms are necessary for India to continue climbing the ranks, which will ultimately lead to a better business environment and greater prosperity for all.
