Insight – India on the rise in latest ease of doing business rankings

India has moved up 14 places to be 63rd among 190 nations for ease of doing business, in the World Bank’s Doing Business 2020 report, released on 24 October.

The country was 77th among 190 countries in the previous year’s rankings. The World Bank report assesses improvement in the ease of doing business environment in Delhi and Mumbai.

‘It is encouraging to see the steady implementation of reforms in South Asia,’ says Rita Ramalho, Senior Manager of the World Bank’s Global Indicators Group, which produces the study. ‘Continued and sustained progress is key to improving the domestic business climate and enabling private enterprise.’

Major improvements were registered in the areas of Starting a Business, Dealing with Construction Permits, Trading Across Borders and Resolving Insolvency.

Importantly for Australian business, importing and exporting has become easier for the fourth consecutive year. India now ranks 68th globally on this indicator and performs significantly better than the regional average: for example, documentary compliance hours for imports averages 22 versus 93.7 hours for the region.

India joins an eclectic group of countries with the most notable improvement in doing business: Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China and Nigeria.

Effective and efficient insolvency laws are vital to stability in financial systems and fundamental to economic growth. Entrepreneurship, by nature, involves risk taking. Some businesses will fail. A sound insolvency and bankruptcy process enables rapid resolutions of such problems.

The establishment of a uniform insolvency code in 2016 as part of wider corporate law reform has led to a gradual increase in the number of reorganisations. As a result, the overall recovery rate for creditors has jumped from 26.5 to 71.6 cents on the dollar (for Mumbai), which is above the OECD benchmark of 70.2.

While there has been progress, India still lags in areas such as contract enforcement (163rd) and property registration (154th), rankings for which did not move and slightly deteriorated respectively. In Mumbai for example, it takes 68 days and costs on average 7.4% of a property’s value to register it, longer and at greater cost than among OECD high-income economies. And it takes 1,445 days for a company to resolve a commercial dispute in the same city, almost three times the average time in OECD high-income economies.

To strengthen Australia’s profile and deepen strategic relationships with India, Australian Prime Minister Scott Morrison will visit in January 2020.

Australian businesses seeking to engage with India can register with Austrade.

Dr Matthew Durban is Australia’s Senior Trade & Investment Commissioner in India with responsibility for Austrade Posts in Mumbai, Bengaluru, Hyderabad and the in-market Resources & Energy Industry Team. He has almost thirty years commercial experience across five countries.