Maharashtra not India's best: Report

IT takes 89 days to start a business, says World Bank

If you're wondering why foreign investors are preferring to set up shop in states other than the country's top investment-zone Maharashtra that tops the Centre for Monitoring Indian Economy (CMIE) figures for overall investment, and are going to states like Tamil Nadu, the World Bank's latest survey tells you all "" Maharashtra is too costly, in terms of both the time as well as the costs involved in setting up a business vis-a-vis other states.

According to the CMIE's CapEx database, of the Rs 122,600 crore of investments proposed by foreign investors, Rs 27,700 crore were committed to projects in Tamil Nadu, and this was then followed by Rs 18,400 crore for Orissa, and then by Maharashtra with Rs 16,700 crore.

Andhra Pradesh was fourth with Rs 15,500 crore. However, in terms of total investments by all private players, Gujarat is the top-ranked state. Maharashtra tops the overall investment by virtue of the fact that government investment is the highest among all states.

The Bank's data covers 145 economies, and within India, they deal with 9 state capitals which they use as a proxy for the investment climate in the whole state.

So, the data find that while it takes just two days to set up a business in Australia, 41 in China and 47 in the South Asia region as a whole, it takes 89 days in India.

As a proportion of the per capita national income, the time taken translates to 49.5 per cent of the annual per capita in India as compared to 14.5 per cent in China and 10.7 per cent in Sri Lanka.

Within the country, it takes 89 days to start a business in Mumbai (proxy for Maharashtra), a figure that includes around 60 days to get a Permanent Account Number (PAN) card from the income tax authorities and adds up to 35 per cent of the annual per capita income.

Getting a Tax Administration Number (TAN) takes around 45 days, but the Bank's handbook tells us helpfully that this 'procedure can be done simultaneously with the previous (PAN application) one'! Getting both a PAN and a TAN, interestingly, is much quicker in cities like Hyderabad, Chennai and Bangalore.

While states like Uttar Pradesh allow a maximum of ten hours for working hours in a day on a six-day week basis, West Bengal allows a maximum of 8.5 for 5.5 days a week.

It takes one day to register property in Norway, 32 in China and 67 in India. And within India, it takes 35 days in Karnataka and 67 in Maharashtra. It takes the most time in Punjab (142 days).

As a proportion of the property value, however, it costs 10 per cent to register property in Punjab as compared to 14 in Maharashtra. Andhra Pradesh's Hyderabad is the costliest with 14 per cent of the property value needed to get it registered.

Andhra Pradesh, however, is the cheapest when it comes to the costs of creating collateral (2.1 per cent of the value of the property) as compared to Maharashtra's 11.3 per cent.

It costs 13 per cent of per capita income to enforce a contract in Karnataka as against 43 per cent in Maharashtra and while creditors get to recover 16.6 cents on the dollar in Karnataka, they get only 12.5 in Maharashtra.