Doing Business: India climbs 12 steps on index
INDIA has become a better place to do business with easier crossborder trade and greater credit access. The country has moved up 12 notches to 120 in the index of 178 nations listed in World Bank’s 2008 edition of Doing Business. Singapore, for the second year running, tops the aggregate rankings on the ease of doing business. China has moved up 9 places to the 83rd rank. The survey notes that India provides better access to credit by expanding credit bureau coverage to individuals as well as businesses. It also introduced an electronic registry for security rights granted by companies. The country has adopted better cargo management, it has been acknowledged. Traders can now submit customs declarations and pay customs fees online before the cargo arrives at the port. This reduces time lag by 7 days. It takes 18 days to meet all administrative requirements to export, down from 27. Overall, south Asia picked up the pace of regulatory reform over the past year to become the second-fastest reforming region in the world, on par with the speed of reform in the countries of the OECD. The report is the fifth in an annual report series issued by the World Bank and IFC. The rankings are based on 10 indicators of business regulation that track the time and cost to meet government requirements in business start-up, operation, trade, taxation, and closure. The rankings do not reflect such areas as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates. Emerging markets across the board have registered an absolute increase in ranking because of fast track reforms. These countries have made reform of business regulation a policy objective, giving an impetus for new business start-ups. “The report finds that equity returns are highest in countries that are reforming the most,” IFC vice-president (financial & private sector development) Michael Klein said. “Investors are looking for upside potential, and they find it in economies that are reforming — regardless of their starting point,” he added. To close a business in the country is woefully slow, taking 6-10 years against the OECD average of less than 2 years. On taxation, the country slipped 7 places. On an average, there are 60 tax-related payments a business has to undertake per year here against OECD’s average of 15. While India’s position on labour reforms are understandably low at 86th, its worst performance comes in the wake of enforcing contracts where it is ranked 177th. What this means that it takes four years for a district court to intervene in a dispute between two commercial establishments.