CHOKED BY RED TAPE

INDIAN FIRMS ARE HOBBLED BY ENDLESS COMPLIANCES, COMPLICATED LAWS AND OVERLAPPING REGULATIONS

- SHWWETA PUNJ

INDIA HAS COME A LONG WAY since the days of the licence raj, but starting and running a business still remains difficult. From land acquisition to compliance with labour and licence laws to the ever-present threat of harassment by inspectors and officials, Indian firms deal with a daunting series of challenges. These lead to inordinate delays and cost overruns, disillusioning entrepreneurs to the point that many look abroad to find more business-friendly environments to operate in. On average, there are 27,000 compliances relating to labour alone, with 61 acts governing environment, health and safety (see Unease of Doing Business). (Compliances refer to legal regulations; these include paying taxes or getting business registrations. Filings are paperwork submissions and record-keeping requirements.)

Take the story of Binod Kumar Chaudhary, a billionaire from Nepal and chairman and president of the Chaudhary Group, which is involved in both the hospitality and food sectors (it manufactures the popular Wai-Wai noodles). In 2010, he bought land in Surat, intending to set up a hotel, but abandoned the project after several years of trying to get approvals. “The procedure for getting approvals for land and buildings is very complicated,” he laments. “[Business is] all about the timing and opportunity cost.” He adds that in his experience, when it comes to setting up factories, state governments have been very supportive, but when it comes to the hospitality business, getting approvals is a nightmare. And another example is that of Rohan Shah, an entrepreneur looking to set up a factory in Maharashtra who went online to detail his months-long ordeal (see Ground Realities).