Starting trouble: Setting up a business still a challenge

Time taken to start a business in India has risen to 29.8 days from 26 days earlier

India has slipped a notch in the World Bank’s ranking on starting a business — from 155th last year to 156th this year.

The time period required to start a business increased to 29.8 days from 26 days, according to the World Bank’s Doing Business 2018 report. 

The report, release on Tuesday, said India has jumped 30 places to reach the 100th rank on the ease of doing business list. The World Bank took only Delhi and Mumbai into consideration while preparing its report. Despite the improvement in the overall ranking, India slipped on starting a business.

Nilaya Varma, partner, KMPG, said improvement in rank was possible through integration of various services such as registrations of a company, GST enrollment, registration with the provident fund authority and the state insurance scheme, among others. “Make all services, processes required for starting a business online through a single form. An attempt should be made to record encumbrances (lien, mortgages, etc) in an electronic database.”

An official in the Department of Industrial Policy & Promotion said the government would push reforms that have been implemented but not considered by the World Bank in the latest report. “These were turned down for a variety of reasons. Some of these reforms fell foul of the cut-off date of May 31, after which no implemented reform is considered by the multilateral body. Others were not considered on technical grounds or did not have enough impact on the responder’s side,” a senior DIPP official said. “We are going to and ensure these are added to the list of India's achievements in easing business climate in the country before the next year’s rankings come out.”

Another official in the Ministry of Corporate Affairs said a high-level meeting would be convened this week to review the various measures taken so far.

Earlier, a similar report from the NITI Aayog-IDFC Institute Enterprise Survey of Indian States showed that the number of days required to set up a business in India was much higher than what the World Bank had reported in its 2017 and 2018 reports. The NITI-IDFC report, which the government dismissed as a research document, showed that it took around 118 days for an enterprise to start a business.

But India has showed some improvement in the latest World Bank Report, especially on other parameters of ease of doing business such as getting construction permits. The time taken to get construction permits was 143.9 days in the 2018 report, against 164 days in the 2017 report. The NITI-IDFC survey had pegged it at 156 days. 

Similarly, the time taken for getting electricity connection has gone down, according to the 2018 World Bank report. It now takes 45.9 days, against 46 days in the previous World Bank report. The NITI-IDFC report claimed it took 52 days to get an electricity connection.