labels: industry - general
Longest to start a business in India: WB survey news
Our Economy Bureau
23 October 2004

New Delhi: A joint survey by the World Bank and the Confederation of Indian Industry (CII) states that it takes 89 days to start a business in India, as opposed to 2 days in Australia, 5 in the US and 41 in China.

This is mainly due to the inspector `raj' that is still all pervasive despite extensive measures taken to eradicate it in the past decade.

The World Bank-CII survey also says access to reliable electric power at reasonable rates is the single most significant constraint facing Indian businesses.

Businessmen in India typically face other major constraints like power outages, inadequate credit facilities from banks and have to spend inordinate time in dealing with government officials.

Michael F Carter, World Bank India, country director speaking at the OECD-Global Forum on International Investment in Delhi, said manufacturers in India face almost 17 major power outages per month against one in Malaysia and less than five in China.

As a result about 9 per cent of the total value of output of firms is lost due to power breakdowns — compared to 2.6 per cent in Malaysia and 2 per cent in China. Hence India's real cost of power is 74 percent higher than Malaysia and 39 per cent higher than China's he said.

He said that the frequency and average duration of outages are so great that businesses routinely use generators as any standard industrial equipment in India. 61 per cent of Indian manufacturing firms own generator sets versus 20 per cent in Malaysia, 27 per cent in China and 17 per cent in Brazil, he said.

Apart from this only 54 per cent of small businesses in India have access to bank credit against Brazil's 75 per cent. A great deal of time at about 14.2 per cent of senior management time is spent in dealing with the state government officials for various regulatory issues versus 8.1 percent in China and 7.78 per cent in Brazil according to Carter.

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Longest to start a business in India: WB survey