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Incentives for Investing in India
By Dezan Shira & Associates Delhi Office
Editors: Melissa Cyrill & Pritesh Samuel
World Bank’s Doing
Business Report
The Doing Business Report (DBR), which was
launched in 2003, is an annual survey-based
report that aims to measure the actual costs
of doing business in 185 countries. The report
produces a quantitative assessment of each
country’s regulations for starting a business,
dealing with construction permits, employing
workers, registering property, accessing credit,
protecting investors, paying taxes, trading across
borders, enforcing contracts, securing an electricity
connection, and closing a business. Based on their
scores in each parameter, the report ranks the
countries surveyed, according to their ease of doing
business, relative to each other’s performance.
India’s overall ‘ease of doing business’ ranking for
2017 shows onlymarginal improvement, moving to
130th from131st last year. Responding to themuted
impact of its reform initiatives, the government
announced that a transparent feedbackmechanism
will be put in place to monitor the gaps between
policy formulation and implementation. The figures
on the next page show a breakdown of the World
Bank’s assessment for 2017.
TheWorld Bank recognizes the following regulatory
achievements in India this year:
• Establishment of an electronic system for
companies to pay employee insurance
contributions.
• Easier procedures for exporting and importing.
• New arbitral mechanisms for resolving
commercial disputes.
Investors gauging India’s business competitiveness
based on the DBR should take note of some of
the report’s methodological limitations. India is a
federal democracy, and regulations differ across
the country according to respective state laws and
institutions. Yet, the DBR only evaluates the capital
Delhi and Mumbai (Maharashtra state), which do
not accurately represent the country’s business
conditions overall. In fact, Delhi andMumbai belong
to the lower performing states in India as per the
joint assessment of the Department of Industrial
Policy and Promotion (DIPP) and the World Bank.
Results from their latest survey of Indian states
show that 16 out of 29 states have implemented
more than 75 percent of the 340 reforms proposed
by the DIPP, covering the following categories –
single-window systems, tax reforms, construction
permits, environment and labor reforms, inspection
reforms, access to information and transparency,
and commercial dispute resolution enablers.
Lastly, the World Bank’s Doing Business Report
acknowledges only those reforms that were
reported by business intermediaries as being
implemented by June 1, 2016. This means that a
host of measures implemented since then have
not yet been factored in and should boost India’s
rankings in the near future.