Top 10 challenges of doing business in India

We read so much about India’s rapid economic growth and reform. These have made it an attractive place for foreign investors. There are various business opportunities in Bangalore to help you conduct business.

India is a vast country with immense economic opportunities, but traversing the diverse landscape can be a daunting task. Doing business in India can still be a troublesome endeavor. There are several financial, regulatory, bureaucratic, regulatory, and cultural complexities.

Businesses have much to gain, but only if they have the correct guidance before starting out.  But before that, one needs to know the challenges to start a business. Let us look at the top 10 challenges of doing business in India.

1. Starting a business

There are huge costs and lengthy procedures involved in starting a business in India. It can take around 1-4 months to complete the necessary procedures, in addition to the fees and add-on costs.  These are based on the size and business type you register. A registered company is also bound to comply with several statutory requirements.

2. Land acquisition

Land acquisition in India is complex as it is pretty difficult to establish legal ownership. . There might be litigations involved due to fragmented holdings, inheritance, and seller’s cash demand. Establishing actual land ownership is no less fraught with these issues.

3. Construction permits

Dealing with customer permits is a costly affair as it involves 34 online procedures and 196 days to get permission.  It would help if you had NOCs from the tree authority, sewage, electric, and storm & drain departments. Businesses also should have a construction permit from the CFO, traffic & coordination department, and environmental department.

4. Getting electricity

The cost of getting electricity to do business is relatively cheaper, but it involves several challenging procedures. The issue is that each procedure in itself is time-consuming. It takes around eight days to receive an external site inspection. It will take three weeks to connect externally, install a meter and conduct a test installation. Another problem is that nowadays, demand exceeds supply, which results in power outages.

5. Property registration

Registering a property is a time-consuming process with a range of confusing charges. The registration fee is 1% of the property’s value subject to a maximum of Rs30,000. Stamp duty is mandatory, but there are different stamp duty rates in various states, based on the state’s legislation.

6. Protecting investors

There are various provisions in different legislations to afford adequate protection to the investors. SEBI has taken multiple initiatives like KYC norms, simplifying FPI, and increasing arbitration centers. India has a low rank in the world for the capability to enforce a contract. In India, it takes about 1,445 days (almost four years) to resolve a dispute related to a contract.

7. Paying taxes

No doubt, India’s taxation system is complex as rules, laws, and practices can be confusing to understand. Businesses operating in India are bound to pay 33 different taxes in a year, taking 243 crucial hours.  India’s Corporate Tax Rate is among the highest in the world. Businesses also have to pay other forms of taxes like central sales tax, property, dividend, vehicle, fuel tax, excise duty, and VAT.

8. Exports and imports

India is open to do business across international trade borders.  But there are several hurdles while exporting and importing goods. Exporters and investors face unpredictable and non-transparent regulatory and tariff regimes. They are also required to pay various custom duty rates like Landing Charge, Additional CVD, Integrated GST, and Education Cess. Businesses have to file a long list of documents before moving goods across the borders.

9. Intellectual Property protection

The Government of India allows registering trademarks online with a review period of eight months. However, there are several fundamental weaknesses in the country’s intellectual property framework. Copyright infringement is still widespread in India, owing to lax administration and weak enforcement practices. Businesses find it challenging to get the copyright of their business.

10. Risk of corruption

Businesses operating in India face high corruption and bribery risks. Corruption is a severe issue prevalent in public services, judiciary, and public procurement sectors. Private sector corruption comes under The Companies Act, but that is not enough to protect the businesses against bribery and corruption.

Conclusion

That is all! The above list of challenges will help businesses understand them and find effective ways to cope with them. The challenges are, no doubt, a significant concern for the Indian Government, but it is working to reduce them. Businesses have to find ways to overcome the hassles and conduct operations in India.

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