The Official Narrative: A Remarkable Climb
India's jump in the World Bank's 'Ease of Doing Business' rankings has been a significant headline. From ranking 142nd in 2014 to 63rd in 2019, the improvement is statistically impressive. This leap was driven by key reforms aimed at streamlining business operations.
Key reforms included the Insolvency and Bankruptcy Code (IBC), Goods and Services Tax (GST), and digitalization of government processes. These were game-changers in creating a more unified, predictable national market.
The Ground Reality: Navigating the Hurdles
While the high-level picture has improved, micro, small, and medium enterprises (MSMEs) and foreign investors still face significant on-ground challenges. The reality is often a story of contrasts.
The Myth: Seamless Digital Processes
Starting a business is now a single-day affair online.
The Reality: While registration is faster, obtaining all necessary licenses, permits (especially from state and municipal levels), and environmental clearances remains a complex and time-consuming web of interactions, often requiring physical follow-ups.
The Myth: Quick Contract Enforcement
The IBC has made resolving insolvency straightforward.
The Reality: While the IBC is a monumental reform, judicial backlogs mean that contract enforcement and dispute resolution can still take years. The legal system is overburdened, leading to significant delays and costs.
The Myth: Simplified Taxation under GST
GST is a 'one nation, one tax' system that's easy to comply with.
The Reality: GST has multiple slabs, complex input tax credit rules, and frequent amendments. Compliance requires sophisticated software and expert guidance, posing a significant challenge for smaller businesses.
The Myth: Land Acquisition is Easy
Clear land titles are readily available for industrial projects.
The Reality: Land records are often outdated and unclear, leading to disputes. Acquisition is a major bottleneck for large-scale manufacturing and infrastructure projects, often involving lengthy negotiations and legal challenges.
Key Takeaways for Investors
- Acknowledge the Duality: Celebrate the macro-level improvements but prepare for micro-level friction.
- Due Diligence is Non-Negotiable: Thoroughly investigate every aspect of a deal, from land titles to local permits. Do not rely solely on national-level declarations.
- Local Expertise is Key: Partner with on-the-ground experts—lawyers, accountants, and consultants—who understand the nuances of the local state and city-level bureaucracy.
- Factor in Delays: Build buffers into your timelines and budgets for unforeseen regulatory and legal delays. Patience is a critical asset.
- Leverage Digital, But Don't Abandon Physical: Use online portals for everything you can, but be prepared to send a representative to a government office to move a file from one desk to another.