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 |
