‘Corruption no longer among top 3 hurdles to doing business in India’

‘Corruption no longer among top 3 hurdles to doing business in India’

News:

  1. The latest edition of the U.K. India Business Council’s Ease of Doing Business Report was released recently.

Important Facts:

  1. Findings of the report:
  • The perception among U.K. businesses that corruption is a major barrier in doing business in India has halved compared with what it was in 2015.
  • There has been a considerable year-on-year fall in the number of companies that viewed ‘corruption’ as a major barrier from 34% in 2016 to 25% in 2017, halving since 2015, where it stood at 51%,
  • Those identifying ‘corruption’ as a major barrier has declined far more dramatically over the four-year course of this survey among those currently doing business in India [decline of 27% in the last two years] where it is no longer considered a ‘top-three’ barrier compared to those not currently active in India.
  • ‘Taxation issues’ and ‘price points’ overtook ‘corruption’ as major barriers identified by 36% and 29% of respondents, respectively, the report said.
  • However, the proportion of respondents identifying ‘taxation issues’ was 3% lower in 2018 than 2017, which suggests that businesses may be starting to adjust to the GST.
  • The extent of digitalisation, however, varies markedly across sectors, as does corruption, eg., those engaging in infrastructure projects still reporting significant issues relating to corruption.

  1. Issues:
  • Those currently doing business in India cite ‘taxation issues’ as a consistent barrier, whilst those looking to enter the Indian market understandably rate ‘identifying a suitable partner’ as their most salient issue after a considerable decline in reports of ‘legal and regulatory impediments’ from 2017 to 2018,” the report said.
  • The key issue for those outside India is increasingly market demand for their products and services relative to government and bureaucracy-related barriers.”
  • The government’s ‘e-biz’ initiative towards faster clearances would improve the business environment, but the lack of transparency around business approvals, particularly in the case of statutory approvals for investments remains a major impediment.
  1. Initiatives reducing corruption:
  • The report noted that initiatives such as Aadhaar, electronic submission of government documents, acceptance of electronic signatures, and the push to file taxes online, have all reduced face-to-face interactions where corruption is most likely to take place.
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