'Quality of bureaucracy' rated as weakest in India's biz milieu: Survey

On the other hand, a year on from its implementation, perceptions of the GST regime have greatly improve

‘Quality of bureaucracy’ is rated as the weakest component of India’s business environment for the fourth year running, a survey by the UK India Business Council (UKIBC) showed.

The parameter has trumped other issues such as corruption, regulatory complexity, and land availability, UKIBC’s fourth annual study on ‘Doing Business in India’, released on Monday, showed. The survey is the result of responses from 89 British companies, representing a combined turnover of at least $122 billion globally.

‘Quality of bureaucracy’ was rated as the weakest component of India’s business environment for the fourth year running, with 67 per cent of respondents citing it as ‘poor’ or ‘very poor’. Apart from lower regulation, supportive government policies, quick approvals, and effective bureaucracy remain among the most important factors for British investors while deciding where to invest.

Many respondents felt further improvements in bureaucratic processes need to be rolled out before India is on a par with other effective and attractive markets for global businesses.

The proportion of all respondents citing ‘corruption’ - long considered as a significant barrier to doing business in India - has reduced in the latest survey to 25 per cent in 2018, down from the 51 per cent in 2015. 

On the other hand, a year on from its implementation, perceptions of the goods and services tax (GST) regime have greatly improved. More than twice as many respondents now believe the GST will improve the operating environment in India, with 48 per cent agreeing and 19 per cent disagreeing, according to the report. This is a reversal from last year, where only 26 per cent of respondents were optimistic about the GST, with 28 per cent pessimistic and 46 per cent unsure.

Overall, 51 per cent of respondents thought the ease of doing business in India was improving, while 34 per cent thought it was the opposite and 15 per cent remaining unsure. “The overall results are encouraging. More than 80 per cent of all respondents expressed an intention to increase investment in India within the 12 months,” Richard Heald, chief executive officer, UKIBC, said.

An overwhelming number of companies currently want to expand into Maharashtra (25 per cent), while the second favourite choice Delhi has caught the eye of 14.3 per cent of all investors. Industrialised Karnataka came third.

Since 2000, the UK has been the largest G20 investor in India, investing £17.5 billion and creating 371,000 new jobs, according to the UKIBC. This represents 10 per cent of all foreign direct-related jobs in that period. British companies in India now employ almost 800,000 people, representing an impressive 1 in 20 jobs in India’s organised private sector, the chamber said.

Fifty per cent of India’s growing population remains below the age of 25 and foreign investors continue to be attracted by domestic demand driven growth. The current surge in consumer spending, predicted by the Boston Consulting Group to increase to $3.6 trillion by 2020, is an added incentive, says UKIBC.