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India is red tape superpower: Survey

world Updated: Jan 26, 2011 22:55 IST

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India has topped a list of the most “over-regulated countries in the world” in a survey on Asian business and politics by Hong Kong-based Political and Economic Risk Consultancy Ltd (PERC).

The survey used responses from American executives about regulatory conditions in the United States to provide a benchmark against which to assess the Asian scores. India was rated worst in terms of over-regulation, scoring 9.16 points out of 10, followed by China with 9.04 points, Japan in third position with 3.28 points and the US at fourth with 1.51 points.

Hong Kong received the best score in the survey of 0.98 point, while Singapore was second with 1.08 points, according to the survey done in the last quarter of 2010, based on responses from 1,370 executives.

In general, regulations were complex and non-transparent, while standards and certifications procedures were onerous in India, according to the PERC survey findings.

Foreign exchange, capital transactions and some credit operations were subject to approvals, restrictions and additional requirements that went far beyond what most other countries require, concluded the survey. Even procedures for something as simple as getting a tourist visa were more cumbersome in India than elsewhere, it pointed out.

It also cited examples from the World Bank’s Doing Business Survey of why India’s regulatory system deserves to be graded as poorly as it was. It can take a month-and-a-half to register property, almost 200 days to obtain a construction permit, over 1,400 days to enforce a contract, and seven years to close a business.

“Documentation requirements for both exports and imports are onerous,” it said.

“Labor requirements are strict and companies lack flexibility on hiring and firing workers,” it concluded.

Regulations in the country were frequently not enforced, which raised the question of why they were on the books at all, the it noted.

“In a recent scandal involving the telecommunications ministry’s mishandling of an allocation of mobile phone spectrum, as many as 85 of 122 new licences which were bundled with the bandwidth allocation were issued to companies that did not have the required capital to seek bandwidth,” the survey pointed out.