Ease of Doing Business in India- Current State and Future Prospects

India was once home to the most flourishing trading business in the entire world; a business set up originally by the East India Company, but handled and managed by Indian traders. But, the manner of exit of Britain and the post- World War 2 world was not very favorable for a newly christened country like India. The world’s focus was on rehabilitation and restoration rather than regeneration and production.

This unfavorable climate forced India to maintain a closed economy for years to come; nurturing its nascent industries and small businesses, allowing them to survive and focus solely on domestic consumption. But, the government of India followed this economic policy a tad longer than it should have been.

A closed economy model should only be a temporary phenomenon if any developing nation wishes to embark on the long road to success. The repressive policies of the government are still haunting Indian business sentiment several decades later. The World Bank group is an organization which analyzes various aspects of doing business in 189 countries across the world. India has been a consistent backbencher in its rankings and has shown little or sometimes even negative signs of improvement over the years.

As of 2015, India has fallen two places to the 142^nd position in the ease of doing business rankings. This rank represents the ease of running an existing business in the country. Starting a new business in India is a gargantuan task altogether. Complex policies, supererogatory regulations, executive corruption are part of the barrage of problems that businesses have to face.

The economic policies in this country have always been decided on the political mandate, rather than on the requirements of the economy. Positive and forward looking economic decisions are often followed by subsequent years of repressive taxation policies. As soon as a business thinks of poking its head into the mess of the Indian policy system, it’s forced back into the dark, gloomy halls of indecision and laggardness.

The Indian governance framework is an endless rain of regulations after regulations. When a company might finally think that it has all the required documents in place and can finally focus on running the business (the thing that really matters above all else), some new hurdle will surely pop up, leaving the owners frustrated and in bad taste.

Got your shiny new approval certificate from the State Authority? Thinking of holding client meetings and pitching your idea to the board? Think again. This was just the start. You need to go big now. The central mess awaits you for its approval. Such restrictive environment is highly overbearing on innovation. Set aside innovation, one cannot even hope to achieve optimal functionality.

But, business experts forecast fair days ahead. The NDA government is on a positive footnote to change the business sentiment across India. The government is targeting a place in the Top 50 in the ease of doing business ranking in the coming 5 years. High priority is being given to reducing paperwork across the board in all departments and all states. Currently, according to estimates, businesses need 27 days in Delhi and 30 days in Mumbai to set up. The government hopes to significantly reduce these minimum figures and achieve a more reliable and streamlined process of registration for businesses. Several steps have been taken which have gone largely unnoticed, but will greatly help the cause.

Several amendments have been made to the Companies Act to accommodate the reform measures needed to make it easy to start a business from scratch. ESIC registration, filing for PAN and TAN and other allied processes can be done through online portals. Earlier, around seven documents were required for trading in exports and ten for imports. However, according to the Directorate General of Foreign Trade, only three documents will be required henceforth. Several other flagship programs are underway by the government to invite investors and MNCs to a supposedly reformed India.

As of August 2015, the Prime Minister has been on Twenty Six foreign trips and has been constantly advertising The Make in India initiative. The strong points that enable him to put this view forward are the changes being carried out right here at home. Make in India cannot hope to succeed without improving the investment sentiment and the ease of governance.

While there is tremendous upheaval happening in government offices as we speak, yet one problem still remains unchecked and undeterred-Rampant Corruption. None of Mr. Modi’s policies include measures to control and curb official corruption once and for all. And that may be the reason that Make in India has not taken off yet as it should have, right from its inception.

But, the road to progress has some speed bumps, which can be overcome easily if one continues to keep moving forward. Abolishing repressive taxation policies, red tape and most importantly corruption, is the way of moving forward. After a long time, a government shows promise if not in much, but its intent to do well.  But what will really matter down the line is the mettle of the government to flex its muscles in face of parliamentary logjams and economic inaction in response to volatile petty politics. The path is set, the map has been laid, all that this government needs to do is put the pedal to the metal. All this will enable and empower the immense entrepreneurial talent that our country holds and give way to innovation, which will in return lead India on its path to Global success. The future is quite bright, if the government and the people choose to believe in it.