By most measures, India is set to become the world’s fastest growing major economy this year, outpacing China. Yet, India remains not an easy place to do business in.
Infosys co-founder NR Narayana Murthy’s comments about how companies end up losing money in government projects need to be seen in this context. In many ways his remarks mirror India’s poor ranking of 142 in the World Bank’s Ease of Doing Business report.
Getting a power connection for a new business takes 105 days, more than three times the Singapore average of 31 days. It takes 47 days to register a property in India compared to 4.5 days in Singapore.
It’s not just about private business. It is about government projects as well. Mr Narayana Murthy’s observation that unless the government comes up with an attractive and competitive set of clauses, large companies may not be keen on working with it, should serve as a reminder that GDP growth rates could be masking a few rough edges that need ironing out.
While adverse policy pronouncements can spark fears among global investors, domestic entrepreneurs also have a similar tale to tell on India’s business environment.
The infrastructure sector is a case in point. The slow pace of implementation is partly attributable to the relatively muted response from private developers and looming questions over the effectiveness of the much-touted public private partnership model over the last few years.
Government projects need to have clauses on a par with international best practices to attract Indian players. Initiatives such as ‘Make in India’ and ‘Digital India’ are as much an invitation to domestic and foreign companies as a promise to rectify everything that has kept the country at almost the bottom of the ‘ease of doing business’ index.
From energy shortages and land problems to ambiguous tax laws and byzantine labour rules, a barrage of hurdles have kept away large-scale private investments in what should otherwise count as a massive, attractive market.
Lack of cooperation between the Centre and states also turns off investors. These issues remain central to the ambition to turn India into a manufacturing powerhouse and make the country more investor-friendly.