Doing Business in India: Dissecting UN Report 2009-1.

Going by the recent World Bank Doing Business in India report, India ranks a measly 122nd out of a total of 181 economies worldwide when ease of starting, operating or exiting a business is considered. Singapore is the top ranked economy in the ease of doing business. What surprises me even more is the inclusion of Pakistan on the 77th ranking spot. So, apparently India lags behind its perennial ally(?) and that too by a wide margin. 

I will divide the report in a series of posts. This one here is intended for the: 

Part 1 : Starting a business in India(S.B.I from hereon)

1. Ease of doing business: It incorporates the overall requirement of a burden free, convenient and transparent way to start, initiate, operate, expand, close your business. India ranks 122nd overall.

2. S.B.I: This forms the most important indicator of the level of corruption prevalant in the government. The more the number of procedures and formalities to be completed the more is the potential point of contact with a government official and the more is the possibility of the issue of corruption. 

India has been ranked a lowly 74, two steps down since last year, among 180 countries of the world on the worldwide Corruption Perceptions Index (CPI), prepared by independent international agency Transparency International.

India ranks 121st on this parameter with 13 overall stages to be completed before an entrepreneur can actually concentrate on his business. Denmark and countries like New Zealand have far easier and convenient norms with a just a single step solution to opening a new venture. These are the good practice economies. Comparable economies of the likes of Brazil, China, Japan, Mexico, Pakistan have 18,14,8,9,11 steps that are needed to be completed while initiating a new business. 

The 13 steps as envisaged by the Gomint of India is as follows:

1. Obtain director identification number (DIN) on-line;

2. Obtain digital signature certificate on-line;

3. Reserve the company name with the Registrar of Companies (ROC) on-line;

4. Stamp the company documents either at the  Superintendent or an authorized bank;

5. Present the required documents along with the registration fee to the Registrar of Companies       to get the certificate of incorporation;

6. Make a seal;

7. Visit an authorized franchise or agent appointed by National Securities Depository Services Limited to obtain a permanent account number;

8. Obtain a tax account bumber for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department;

9. Register with Mumbai Shops and Establishment Act, 1948;

10. Register for VAT before the Sales Tax Officer of the ward in which the company is located

11. Register for profession tax;

12. Register with Employees' Provident Fund Organization;

13. Register for medical insurance (ESIC);

So, basically there are 13 contact points. Knowing fully well the functioning of the Government Offices and its workers I can safely conclude how hard it will be for someone to think about starting a business. It takes a total of 30 days in India on an average to complete the procedures involving the start-up. In Brazil the duration stretches to 152 days, it is 40 days in China, 23 days in Japan, 28 days in Mexico and 24 days in Pakistan. 

P.S: You should note from the table provided that India ranks 28th when it comes to access of credit from banking/non-banking firms. Not all is bad on the Indian soil then is it?