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Doing Business in India

Ryan Hahn's picture

If you wanted to start a business in India, what city would you pick? The just-released report Doing Business in India 2009 has an answer: Ludhiana. Hyderabad and Bhubaneshwar would also be good choices. Why? These were ranked as the top three cities in India (out of 17 included in the ranking) in the overall ease of doing business. 

Doing Business in India

While the annual Doing Business report ranks countries around the globe on the ease of doing business, the great variation within countries—especially large countries with a federal structure—means that it's also useful to rank the business environment of cities within a country. The Doing Business team started a separate line of subnational reports in 2006 that adapts DB methodology to the ranking of cities within a country. The Doing Business in India 2009 report pares back DB's standard line-up of 10 indicators to 7 to produce the ranking of cities shown above.

Here are a few more highlights from the report:

  • Substantial variation between cities in the cost of opening a business: "In Patna, Kolkata, and Bhubaneshwar, entrepreneurs spend less than 40% of income per capita to open a business; for those in Mumbai, the cost is almost double."
  • Big differences in registering property: "In Gurgaon, it takes only 26 days and 7.7% of the property value to register property, easier than in Guwahati, where it takes 84 days and 15.4% of the property value to do so."
  • A very high number of yearly tax payments in all cities (compared to China, Brazil, or the average for South Asia): "...the number of yearly payments varies from 59 in Ludhiana, Noida, Bengaluru, and Mumbai to 76 in Kochi and 78 in Hyderabad."

Update: David Kaplan reminds me in the comments that DB does not capture all the elements of the business environment. Let me make it explicit by quoting directly from the report:

Doing Business in India does not measure all aspects of the business environment that matter to companies or investors, nor all of the factors that affect competitiveness. It does not, for example, measure security, macroeconomic stability, corruption, labor skills, the underlying strength of institutions or the quality of infrastructure. Nor does it focus on regulations specific to foreign investment.

Comments

Submitted by David Kaplan on
Hi Ryan: Just a small comment. You say "If you wanted to start a business in India, what city would you pick? The just-released report Doing Business in India 2009 has an answer." I just want to make sure people don't take that statement too seriously. We all understand that Doing Business does not measure all things that are important for the business climate.

Submitted by Sidhartha Ghosh on
I would like to resonate David Kaplan's comment of June 30. Whilst the list does reflect,to a great extent, ground realities, it is an absolute truism that "Doing Business" does not have a handle on all the variables necessary for a conducive business climate, especially in India!

Chinese politician = Control + Certainty ! But Indian Politics= Coalition Government + Corrupt Police + Corrupt Judiciary + High Crime and long lines ! And yes, they KNOW , India is the largest democracy .. don't they know THAT much? SO, in summary: 1. It's a perception issue and a positioning problem. Yes 2. But window dressing and repackaging (necessary but not sufficient) wont make the cut. Some radical measures must be taken to play CATCH up.

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