Doing Business in India: A Challenge or Opportunities

Despite faltering after the great recession of 2008 and sustaining a GDP growth rate of 0.6 percent for over a decade, Ireland has been ranked at the top in the list of the “Best Countries for Business” recently released by Forbes.  Ironically, India—the country which has an average GDP growth rate of over 6% for over a decade— is ranked 98th among 145 nations graded by Forbes. Similarly, China has been ranked 94th among 145 nations; despite that fact that the country has maintained a consistent annual GDP growth rate of 9.2 percent since 1989. Other BRICS nations such as Brazil and Russia have been ranked at 80th and 91st positions respectively in the list of “Best Countries for Business.”  Therefore, it becomes pertinent to ask: Why despite performing so well in the near past and much better than many developed nations, India has been ranked so low in the list?   

Source : Forbes 2013

In its report, Forbes says that young population base, low dependency ratio, healthy savings and investments give India a positive outlook for medium term growth. However, the magazine notes that India has many long-term challenges such as poverty, corruption, violence and discrimination against girls, inefficient power generation and distribution system, ineffective enforcement of intellectual property rights, inadequate transport and agricultural infrastructure which the country needs to address. However ace Indian Entrepreneur Vinay Rai thinks otherwise. He says, “The Forbes list of best countries for doing business completely ignore the main reason of why a company would like to do business in that country in the first place—the main reason why a company would like to do business in a particular country is to capture the country’s markets, or to use its low cost man power or its high quality talent or research capability and derive profits from these factors.” He further adds, “If the difficulties faced in terms of parameters like infrastructure, corruption, governmental delays in permissions were to be the main criterion, then countries like China, India and Brazil would have been the least preferred destinations for investments!!! Yes surprisingly they attract the maximum foreign direct investment and no company can dare ignore their markets.” It is a fact that emerging economies like China, India and Brazil continue to charge ahead. They account for 16 of the top 25 countries in the 2013 A.T. Kearney Foreign Direct Investment Confidence Index, with China (2nd), Brazil (3rd), and India (5th) all in the top five once again.

In his book, “Think India: The Rise of the World’s Next Superpower and What it Means for Every American,” Vinay Rai Philosopher writes, “India is virtual gold mine of treasure and buying power, if properly tapped and addressed. Indians have trillions of dollars’ worth of savings—wrapped up in property, livestock, sparkling jewels, and precious metals—and are hoarding some $200 billion worth of gold. With due respect, I believe Forbes is completely out of sync in these ratings as they do not give a proper direction to the reader on where he should do business and why. This list is actually misleading and may send the average investor on a path that is fraught with danger and runs the risk of his losing a lot of his hard earned money.”  When will the western world wake up to the new realities and actually learn what “doing business anywhere in the world” actually means and what are the parameters that corporates look for while taking investment decisions or even simply wanting to “do business”?  If the proper criteria are taken and evolved correctly then in the list of “Best Countries for Doing Business”, India would be rightfully placed in the top 3.