Ease of Doing Business in India: An Overview
India’s ease of doing business has significantly improved recently, jumping from 142nd in 2014 to 63rd in 2020 in the World Bank’s Doing Business Ranking. This leap is attributed to several reforms implemented by the government, including:
- Streamlining business registration processes: The introduction of online platforms like the Unified Company Registration Portal has reduced the time and paperwork required for registering a business.
- Easing compliance burdens: The government has simplified tax regulations, reduced the licenses needed for certain businesses, and implemented measures to reduce corruption.
- Improving infrastructure: Investments have been made in infrastructure development, such as roads, ports, and airports, which have improved access to markets and logistics.
- Promoting digitalisation: The government has launched several initiatives to promote digital payments, e-commerce, and online access to government services.
These reforms have made India a more attractive destination for foreign and domestic investors. However, there are still some challenges that need to be addressed, such as:
- Complex regulatory environment: Despite the reforms, the regulatory environment can still be challenging for businesses.
- Corruption: While corruption has been reduced, it remains a significant issue in India.
- Limited access to finance: Micro, Small and medium-sized enterprises (SMEs) often face difficulty accessing affordable financing.
- Infrastructure gaps: Despite improvements, India’s infrastructure lags behind developed countries.
Here are some specific areas where India has improved its ease of doing business:
- Starting a business: India is now ranked 13th in the world on the ease of starting a business, compared to 158th in 2014.
- Dealing with construction permits: India is now ranked 25th in the world on the ease of dealing with construction permits, compared to 184th in 2014.
- Getting electricity: India is now ranked 22nd in the world on the ease of getting electricity, compared to 137th in 2014.
- Paying taxes: India is now ranked 37th in the world on the ease of paying taxes, compared to 172nd in 2014.
- Trading across borders: India is now ranked 68th in the world on the ease of trading across borders, compared to 130th in 2014.
Overall, India has made significant progress in making it easier to do business. However, there is still room for further improvement.
Here are some additional resources you may find helpful:
- World Bank – Doing Business: https://archive.doingbusiness.org/en/doingbusiness
- Make in India – Ease of Doing Business: https://www.makeinindia.com/
- Invest India – Ease of Doing Business: https://www.investindia.gov.in/
Ease of Doing Business in India for MSMEs
While India has continuously improved its ease of doing business in recent years, for Micro, Small and Medium Enterprises (MSMEs), the experience can still be complex and challenging. However, several initiatives and reforms have been implemented to target the MSME sector, making it easier for them to operate and grow.
Here are some key areas where India has improved the ease of doing business for MSMEs:
1. Online Registration:
- The introduction of the Udyam Registration portal has streamlined the process of starting an MSME, enabling online registration and eliminating the need for multiple documents.
2. Simplified Compliance:
- The government has simplified tax regulations and filings for MSMEs, including introducing the Goods and Services Tax (GST), which replaced multiple indirect taxes.
- Additionally, initiatives like the MSME Samadhaan portal help address delayed payments and improve cash flow.
3. Access to Finance:
- Several government schemes offer MSMEs financial assistance and credit guarantees, like the Credit Guarantee Fund Scheme (CGFS) and the Micro Units Development and Refinance Agency (MUDRA) loans.
- Additionally, initiatives like the Standup India Scheme benefit the entrepreneurial ecosystem among women Scheduled Castes and Scheduled Tribes. MUDRA loan India
- The government has launched various initiatives to promote digital adoption among MSMEs, including free e-commerce platform onboarding, online skill development programs, and support for cloud adoption.
5. Infrastructure Development:
- Investments in infrastructure, such as industrial corridors and dedicated MSME parks, have improved access to markets and resources for MSMEs.
Despite these improvements, challenges remain for MSMEs in India:
- Complex regulations: Although some progress has been made, navigating various regulations and obtaining licenses can still be cumbersome for MSMEs.
- Limited access to finance: While financial assistance schemes exist, accessing adequate funding can still be difficult for many MSMEs.
- Lack of awareness: Many MSMEs remain unaware of the available resources and support programs the government offers.
- Competition from larger businesses: MSMEs often struggle to compete with more giant corporations due to limited resources and market access.
- No Gender Neutral Laws: No Laws that protect Men from Women Centric Laws.
Overall, the Indian government is making strides to improve the ease of business for MSMEs. However, ongoing efforts are needed to address the remaining challenges. And foster a more conducive environment for MSME growth and prosperity.
Here are some additional resources for MSMEs in India:
- Ministry of MSME: https://msme.gov.in/online-services
- MSME Champions Portal: https://champions.gov.in/
- MSME Samadhaan: https://samadhaan.msme.gov.in/
- Make in India: https://www.makeinindia.com/
- Invest India: https://www.investindia.gov.in/
By leveraging these resources and staying informed about government initiatives, MSMEs can navigate the business environment more effectively and contribute significantly to India’s economic growth.