NITI REPORT

Planning to set up biz in India? It takes you 118 days

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The average time taken to set up a business in India is 118 days, according to a latest Niti Aayog- IDFC Institute's Ease of doing business survey. However, it varies across states—from 63 days in Tamil Nadu to 214 in Kerala and and 248 days Assam. This is in absolute contrast with a World bank report last year which said that it took only 26 days to start a business in India.

The survey respondents also seem to have busted the myth that regulatory environment for starting a business in India has improved. Sample this: 38 per cent of the enterprises said that the regulatory environment for setting up a business had improved, the same proportion claimed nothing had changed and 21 per cent said it had worsened.

The highest amount of time went in getting land permits. The average time taken was 156 days. In Punjab, it was 242 days and in Chhattisgarh it was 213 days. 

On an average, firms faced around 46 hours of power shortage in a typical month. In Assam, the average duration of power shortage in a month was 156 hours, and in Bihar it was 139 hours. Firms in West Bengal faced the least power shortage at 11 hours, followed by Delhi at 13 hours.

The survey also asked companies for their perception on access to finance. Forty-six per cent enterprises have reported that access to finance was not an obstacle or a minor obstacle, 24 per cent reported that they were a moderate obstacle, and 30 per cent reported that they were a severe obstacle. The survey also showed that more than half of the businesses relied heavily on retained earnings and personal savings, which proves that formal finance is still inaccessible to a vast section of the business.

The survey also takes into account responses of young versus old enterprises. The survey defines old enterprises as those that have existed for longer than ten years, while less than that were defined as young.

Bihar, Uttarakhand, Punjab and Sikkim have the maximum young firms. Specifically, 80 per cent of all firms in Bihar and 73 per cent in Uttarakhand are ten years old or younger. The high percentages are because of accelerated manufacturing activity in recent years, relative to that prior to ten years ago in these states. The high percentages have also resulted from a low initial manufacturing base. 

According to the survey, Gujarat, Maharshtra, Haryana, Telangana and even Bihar have been categorised as high growth states, while Uttar Pradesh, Chhatisgrah, Kerala, Jharkhand and Himachal Pradesh have been categorised as low growth states. Among the high-growth states, there is a significantly higher presence of computers, electronics and pharmaceuticals, which are high growth sectors.

The survey that was done on 3500 manufacturing firms in 2016 recommends reforming labour laws and making them flexible to improve India's rank in ease of doing business. 

"A larger number of firms in labour-intensive sectors report that finding skilled workers, hiring contract labour, and firing employees was a major obstacle," says the report

There are other recommendations such as accelerating power sector reforms, improving access to finance and creating a level playing field for small and big firms.

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Topics : #NITI Aayog

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