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Top 10 Challenges of Doing Business in India

P R E S E N T A T I O N B Y A S S T . P R O F . S H W E T A N G P A N C H A L - G S F C U N I V E R S I T Y

INTRODUCTIONIndia is going through a period of unprecedented economicliberation, opening its vast consumer base to internationalfirms. However, it is a notoriously difficult place to dobusiness, and having local help on board is the key tounlocking the country’s vast economic potential.

India is an enormous country with vast economic potential,but traversing the diverse and complicated corporatelandscape can be a daunting task without the right help onboard.

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INTRODUCTIONNot only is India one of the fastest growing countries in theworld, it is also going through a period of unprecedentedeconomic liberation, granting overseas investors more accessto its vast and varied market than ever. A large, youngpopulation and a strong export sector await expandingbusinesses, with a potential consumer base that far outstripsmost other nations in the developed and developing world.

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INTRODUCTIONPolitical stability and broad consensus on reforms is also a bigpull for expanding companies, and the well developed bankingsystem and vibrant capital market highlight the maturity ofits financial system. But doing business in India can still be atroublesome endeavour, and having local help can really makethe difference to the success of your venture.

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Starting a Business  The cost of starting a business in India isastronomical, and the procedures involvedcan be daunting without local knowledge.  There are 12 procedures to complete in theinitial set up of a business.  It takes almost a month (27 days) tocomplete the tasks on average, which iswell above the OECD (Organization forEconomic Cooperation andDevelopment) average of 12 days.

First

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Dealing with Construction Permits

Construction permits are also a costlypursuit, involving 34 procedures andtaking 196 days. Obtaining Intimation of Disapproval fromthe Building Proposal Office and payingfees takes around a month, and NOCs mustbe sought from the Tree Authority, theStorm Water and Drain Department, theSewerage Department, the ElectricDepartment, the EnvironmentalDepartment, the Traffic & CoordinationDepartment and the CFO.

Second

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RegisteringProperty

Registering a propertyrequires quite a bit oflegwork and can also incursubstantial charges.  Stamp duty of 5% of theproperty and a 1% charge onthe market value of theproperty incurred at theSub-Registrar of Assurancesare the two fees to look outfor, although the lawyercharges and fees at the Land& Survey Office can alsopinch.

Third

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Getting Credit  India performs the best of allSouth Asian economies for easeof getting credit, ranking 23rd inthe world according to theWorld Bank and InternationalFinance Corporation. The 2013 report this to when a“unified collateral registry,which is centralisedgeographically, becameoperational in Indiastrengthening access to creditand the secured transactionregime”.

Fourth

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Protecting Investorsand enforcingcontracts

The concept of investorprotection is one that hasgarnered a lot of attention oflate, and new bodies such asthe Securities and ExchangeBoard of India (SEBI) havebeen set up to that effect.  Enforcing contracts will alsobe an area that must belooked at; India ranks as oneof the worst countries in theworld for the ability toenforce a contract, taking anaverage of 1,420 days.

Fifth

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Paying TaxesBusinesses operating in India are required to make 33 tax payments a year, taking 243 hours’ worth of attention. The headline corporation tax rate stands at 30%, butcompanies can also incur charges in the form of a central sales tax, dividend tax, property tax, fuel tax, vehicle tax, VAT and excise duty. This has been replaced by GST recently

Sixth

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Trading AcrossBorders 

Despite India opening its borders tointernational trade, there are still severalhurdles to overcome when importing andexporting goods. Several layers of bureaucracy make it verychallenging to move goods efficiently, andcompanies must file a long list ofdocuments before moving goods acrossborders.

Seven

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Resolving InsolvencyIt takes 4.3 years to resolve insolvency in India, far longer than the South Asian and OECD average. The laborious court system can often slow business relations.

Eight

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Culture India is a cultural hotbed, and business is more about building relations than presenting figures and sums. The polychronic culture can be difficult to adapt to for outsiders, and due diligence into the destination is important before travelling.

Nine

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Getting Electricity The cost of getting electricity is relativelycheap in comparison to the rest of SouthAsia, but the number of proceduresinvolved can be rather daunting.  What’s more, each procedure is in itselfquite time constraining, taking aroundeight days to receive an external siteinspection and three weeks to getexternally connected, have a meterinstalled and conduct a test installation.

Tenth

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Thank You!Any Questions Fellas?

Hmmm

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