Snapshot
of Business Environment India
The tables
below provide a snapshot of the business climate in
India by identifying specific regulations and policies
that encourage or discourage investment, productivity,
and growth. Key indicators are used to help measure the
ease or difficulty of operating a business: starting a
business, hiring and firing workers, registering
property, getting credit, protecting investors,
enforcing contracts, and closing a business. To compare
the business climate of India with that of other
economies, click on the topic name. Regional and
high-income OECD averages are provided in each topic for
comparison.
| Region |
South Asia |
|
|
| Income category |
Low income |
|
|
| GNI per capita (US$) |
530 |
538 |
25,773 |
| Informal economy (% GNI) |
23.1 |
35.7 |
16.8 |
| Population (million) |
1,063.70 |
232.49 |
41.50 |
The challenges of launching a business in India are
shown below through four measures: procedures required
to establish a business, the associated time and cost,
and the minimum capital requirement. Entrepreneurs can
expect to go through 11 steps to launch a
business over 89 days on average, at a cost equal
to 49.5% of gross national income (GNI) per
capita. There is no minimum deposit requirement
to obtain a business registration number, compared with
the regional average of 0.0% of GNI and the OECD
average of 44.1% of GNI.
| Number of procedures |
11 |
9 |
6 |
| Time (days) |
89 |
46 |
25 |
| Cost (% of income per capita) |
49.5 |
45.4 |
8.0 |
| Min. Capital (% of income per
capita) |
0.0 |
0.0 |
44.1 |
The difficulties that employers in India face in
hiring and firing workers are shown below. Three indices
measure how difficult it is to hire a new worker, how
rigid the regulations are on working hours, and how
difficult it is to dismiss a redundant worker.
Conditions covered by the indices include: availability
of part-time and fixed-term contracts, working time
requirements, minimum wage laws, and minimum conditions
of employment. Each index assigns values between 0 and
100, with higher values representing more rigid
regulations. The overall Rigidity of Employment Index is
an average of the three indices. For India, the overall
index is 48, compared with the regional average
of 42.3 and OECD average of 34.4. Firing
costs are calculated on the basis of the number of weeks
worth of salary in severance, notification and penalties
that must be paid to dismiss a worker.
| Difficulty of Hiring Index |
33 |
37.0 |
26.2 |
| Rigidity of Hours Index |
20 |
36.7 |
50.0 |
| Difficulty of Firing Index |
90 |
53.3 |
26.8 |
| Rigidity of Employment Index |
48 |
42.3 |
34.4 |
| Firing Costs (weeks of wages) |
79 |
84.7 |
40.4 |
The ease with which businesses can secure rights to
property is measured below using the following
indicators: the number of procedures necessary to
transfer a property title from the seller to the buyer,
and the time and the costs as a percentage of the
property value. In India, it takes 67 days to
register property, compared with the regional average of
55 and the OECD average of 34.
| Number of procedures |
6 |
5 |
4 |
| Time (days) |
67 |
55 |
34 |
| Cost (% of property per capita) |
13.9 |
6.0 |
4.9 |
Measures on credit information sharing and the legal
rights of borrowers and lenders in India are shown
below. One set of indicators measures the coverage,
scope, quality and accessibility of credit information
available through public and private registries. A
second set measures how well collateral and bankruptcy
laws facilitate lending. It ranges from 0-10, with
higher scores indicating that those laws are better
designed to expand access to credit. India has a score
of 4, compared with the regional average of
3.8 and OECD average of 6.3. The Credit
Information Index measures the scope, access and quality
of credit information available through public
registries or private bureaus. The index ranges from
0-6, with higher values indicating that more credit
information is available from a public registry or
private bureau. India has a score of 0, compared
with the regional average of 1.7 and OECD average
of 5.0.
| Cost to Create Collateral (% of income per
capita) |
11.3 |
8.0 |
5.2 |
| Legal Rights Index |
4 |
3.8 |
6.3 |
| Credit Information Index |
0 |
1.7 |
5.0 |
Public Credit Registry coverage
(borrowers per 1000 capita) |
0 |
1.4 |
76.2 |
Private Bureau coverage
(borrowers per
1000 capita) |
0 |
3.1 |
577.2 |
The degree to which investors are protected through
disclosure of ownership and financial information is
measured below. The Disclosure Index captures seven ways
of enhancing disclosure: information on family; indirect
ownership; beneficial ownership; voting agreements
between shareholders; audit committees reporting to the
reporting to the board of directors; use of external
auditors; and public availability of ownership and
financial information to current and potential
investors. The index varies between 0 and 7, with higher
values indicating more disclosure. India has a score of
4, compared with the regional score of 3.2
and the OECD score of 5.6.
| Disclosure Index |
4 |
3.2 |
5.6 |
The ease or difficulty of enforcing commercial
contracts in India is measured below, using three
indicators: the number of procedures counted from the
moment the plaintiff files a lawsuit until actual
payment, the associated time, and the cost (in court and
attorney fees), expressed as a percentage of debt value.
In India, the cost of enforcing contracts is
43.1, compared with the regional average of
39.6 and the OECD average of 10.8.
| Number of procedures |
40 |
29 |
19 |
| Time (days) |
425 |
375 |
229 |
| Cost (% of debt) |
43.1 |
39.6 |
10.8 |
The time and cost required to resolve bankruptcies is
shown below. Costs include court costs as well as fees
of insolvency practitioners, lawyers, accountants, etc.
The Recovery Rate measures the efficiency of foreclosure
or bankruptcy procedures, expressed in terms of how many
cents on the dollar claimants recover from the insolvent
firm. The recovery rate in India is 12.5,
compared with the regional average of 21.4 and
OECD average of 72.1.
| Time (years) |
10.0 |
5.2 |
1.7 |
| Cost (% of estate) |
8 |
8.3 |
6.8 |
| Recovery Rate (cents on the
dollar) |
12.5 |
21.4 |
72.1 |
