Business Environment in India

1. Business Environment in India

2. Why do business in India?
• It is one of the fastest advancing economies
with a ever growing consumer class
• It is predicted to be the third largest economy
in the world
• India’s foreign investment potential is very
high and immense opportunities lies in
manufacturing and services sector.
• Tourism is booming in India.

3. Doing Business Report
• Doing business throws light on the how easy
or difficult it is for the local entrepreneurs to
open and run business when complying with
relevant regulations.
• It measures and tracks changes in regulation
affecting 11 area in the lifecycle of a business.

4. Doing Business Report
• Life cycle of a business consists of:
 Starting a business
 Dealing with construction permits
 Getting electricity
 Registering property
 Getting credit
 Protecting minority investors
 Paying taxes
 Trading across borders
 Enforcing contracts
 Resolving insovency
 Labour market regulations

5. Doing Business Report
• It presents quantitative indicators on business
regulation and protection of property rights
that can be compared across 189 economies
from Afghanistan to Zimbabwe.

6. Doing Business Report
• Limitations of Doing business methodology :
it doesn’t study other important areas related to business.
They are as follows:
 Economy's proximity to large markets
 The quality of infrastructure services
 The security of property from theft and loot
 Transparency of government procurement
 Macroeconomic conditions

7. Doing Business in India
• ECONOMY OVERVIEW
•
• Region: South Asia
• Income category: Lower middle income
• Population: 1,252,139,596
• GNI per capita (US$): 1,570
• DB2015 rank: 142
• DB2014 rank: 140*
• Change in rank: -2
• DB 2015 DTF: 53.97
• DB 2014 DTF: 52.78
• Change in DTF: 1.19
• * DB2014 ranking shown is not last year’s published ranking but a comparable
ranking for DB2014 that captures the effects of such factors as data corrections
and the changes in methodology. See the data notes starting on page 114 of the
Doing Business 2015 report for sources and definitions.

8. • Economies are ranked from 1 to 189 by the ease of doing business
ranking. This year's report presents results for 2 aggregate
measures: the distance to frontier score and the ease of doing
business ranking.
• The ranking of economies is determined by sorting the aggregate
distance to frontier (DTF) scores. The distance to frontier score
benchmarks economies with respect to regulatory practice,
showing the absolute distance to the best performance in each
Doing Business indicator.
• An economy’s distance to frontier score is indicated on a scale
from 0 to 100, where 0 represents the worst performance and 100
the frontier.
Doing Business in India

10. Ranking of India and comparator economies on the ease of
doing business

11. Starting a business
• Formal registration of companies have many
advantages:
• Legal entities can outlive their founders
• Resources are pooled
• These companies have access to services and
institutions like banks courts etc

12. Starting a business
• Doing business measures the ease of starting
a business by recording all procedures
officially required to start up.
• It also records paid in minimum capital that
companies must deposit before
registration(within 3 months).

13. Starting a business
• According to the data collected by doing
business ,starting a business in India requires
11.9 procedures, takes 28.4 days, costs 12.2%
of income per capita and requires paid in
minimum capital of 111.2%of income per
capita.
• India stands at 158 in the ranking of 189
economies on the ease of starting a business

14. Ranking of India and comparator
economies on the ease of starting a
business

15. DB year Reform
• DB2011 India eased business start-up by
establishing an online VAT registration system and
replacing the physical stamp previously required
with an online version.
• DB2015 India made starting a business easier by
considerably reducing the registration fees, but
also made it more difficult by introducing a
requirement to file a declaration before the
commencement of business operations. These
changes apply to both Delhi and Mumbai.

16. Dealing with Construction permits
• According to data collected by Doing Business,
dealing with construction permits there
requires 25.4 procedures, takes 185.9 days
and costs 28.2% of the warehouse value .
• Globally, India stands at 184 in the ranking of
189 economies on the ease of dealing with
construction permits

17. Ranking of India and comparator economies rank on the ease of dealing with
construction permits

18. Reforms in dealing with Construction
permits
• Smart regulation ensures that standards are met
while making compliance easy and accessible to all.
• Coherent and transparent rules, efficient processes
and adequate allocation of resources are especially
important in sectors where safety is at stake.
Construction is one of them.
• DB2013 -India reduced the time required to obtain
a building permit by establishing strict time limits for
preconstruction approvals.

19. Getting electricity
• The procedures for getting electricity includes
• Applications and contracts with electricity
utilities,
• clearances from other agencies and the
external
• final connection works.

20. Getting electricity
• According to data collected by Doing Business,
getting electricity there requires 7.0
procedures, takes 105.7 days and costs
487.7% of income per capita.
• Globally, India stands at 137 in the ranking of
189 economies on the ease of getting
electricity

21. Ranking of India and comparator economies on the ease
of getting electricity

22. Reforms in getting electricity
• DB2015 - In India the utility in Mumbai
made getting electricity less costly by reducing
the security deposit for a new connection

23. Registering Property
• Registering property involves procedures
necessary for a business to purchase property
from another business and transfer the
property title to the buyer’s name.
• The transaction is considered complete when
the buyer can use the property, use it as
collateral for a bank loan or resell it.

24. Registering Property
• According to data collected by Doing Business,
registering property there requires 7.0
procedures, takes 47.0 days and costs 7.0% of
the property value.
• Globally, India stands at 121 in the ranking of
189 economies on the ease of registering
property

25. Ranking of India and comparator economies on
the ease of registering property

26. Getting credit
• Two types of frameworks can facilitate access
to credit and improve its allocation:
• credit information systems
• borrowers and lenders in collateral and
bankruptcy laws.

27. Getting credit
• Two types of frameworks can facilitate access to credit
and improve its allocation: credit information systems
and borrowers and lenders in collateral and bankruptcy
laws.
• Credit information systems enable lenders’rights to view
a potential borrower’s financial history (positive or
negative)—valuable information to consider when
assessing risk. And they permit borrowers to establish a
good credit history that will allow easier access to credit.
• Sound collateral laws enable businesses to use their
assets, especially movable property, as security to
generate capital

28. Getting credit
• The economy has a score of 7 on the depth of
credit information index and a score of 6 on
the strength of legal rights index
• Higher scores indicate more credit information
and stronger legal rights for borrowers and
lenders .
• Globally, India stands at 36 in the ranking of
189 economies on the ease of getting credit

29. Ranking of India and comparator economies on the ease of
getting credit

30. Protecting minority investors
• Protecting minority investors matters for the ability
of companies to raise the capital they need to grow,
innovate, diversify and compete.
• Effective regulations define related-party
transactions precisely, promote clear and efficient
disclosure requirements, require shareholder
participation in major decisions of the company and
set detailed standards of accountability for company
insiders.

31. Protecting minority investors
• Globally, India stands at 7 in the ranking of 189
economies on the strength of minority investor
protection index

32. PAYING TAXES
• Taxes are essential. The level of tax rates
needs to be carefully chosen—and needless
complexity in tax rules avoided.
• Tax rates and tax administration should not
pose as an obstacle to business

33. PAYING TAXES
• On average, firms make 33.0 tax payments a
year, spend 243.0 hours a year filing,
preparing and paying taxes and pay total taxes
amounting to 61.7% of profit.
• Globally, India stands at 156 in the ranking of
189 economies on the ease of paying taxes

34. Ranking of India and comparator economies on the ease of paying taxes

35. Reforms in paying taxes
• DB2011 India reduced the administrative
burden of paying taxes by abolishing the
fringe benefit tax and improving electronic
payment.
• DB2012 India eased the administrative
burden of paying taxes for firms by
introducing mandatory electronic filing and
payment for value added tax.

36. TRADING ACROSS BORDERS
• In today’s globalized world, making trade
between economies easier is increasingly
important for business.
• Excessive document requirements,
burdensome customs procedures, inefficient
port operations and inadequate infrastructure
all lead to extra costs and delays for exporters
and importers, stifling trade potential.

37. TRADING ACROSS BORDERS
• Doing Business measures the time and cost
(excluding tariffs and the time and cost for sea
transport) associated with exporting and
importing a standard shipment of goods by
sea transport, and the number of documents
necessary to complete the transaction.

38. TRADING ACROSS BORDERS
• According to data collected by Doing Business,
exporting a standard container of goods
requires 7 documents, takes 17.1 days and
costs $1332.0. Importing the same container
of goods requires 10 documents, takes 21.1
days and costs $1462.0
• Globally, India stands at 126 in the ranking of
189 economies on the ease of trading across
borders.

39. Ranking of India and comparator economies on the ease of
trading across borders

40. ENFORCING CONTRACTS
• Effective commercial dispute resolution has
many benefits. Courts are essential for
entrepreneurs because they interpret the
rules of the market and protect economic
rights.
• Doing Business measures the efficiency of the
judicial system in resolving a commercial
dispute before local courts.

41. ENFORCING CONTRACTS
• According to data collected by Doing Business,
contract enforcement takes 1420.0 days, costs
39.6% of the value of the claim and requires
46.0 procedures.
• Globally, India stands at 186 in the ranking of
189 economies on the ease of enforcing
contracts

42. Ranking of India and comparator economies on the ease of
enforcing contracts

43. RESOLVING INSOLVENCY
• Fast and cheap insolvency proceedings result
in the speedy return of businesses to normal
operation and increase returns to creditors.
• Doing Business studies the time, cost and
outcome of insolvency proceedings involving
domestic legal entities.

44. RESOLVING INSOLVENCY
• According to data collected by Doing Business,
resolving insolvency takes 4.3 years on
average and costs 9.0% of the debtor’s estate,
with the most likely outcome being that the
company will be sold as piecemeal sale.
• Globally, India stands at 137 in the ranking of
189 economies on the ease of resolving
insolvency

46. Labour Market regulation
• Doing Business measures flexibility in the
regulation of employment, specifically as it
affects the hiring and redundancy of workers
and the rigidity of working hours.