The Hindu Business Line : India more globally integrated than US, Japan: FICCI

In India it takes twice as long for starting a business, three times more cost for registration and double the time for enforcing a contract compared with China.

New Delhi , March 16

EVEN as India surpasses the US and Japan in global economic integration, with 93 per cent of foreign companies expressing an appetite for more FDI in their industries, the manufacturing sector continues to be bogged by compliance and procedural business environment, according to an analysis carried out by the Federation of Indian Chambers of Commerce and Industry (FICCI).

The compliance and procedure-ridden business environment takes a heavy toll in terms of transaction costs and time, according to FICCI.

The analysis notes that India's share of trade in goods and services in GDP at 30.3 per cent was higher than that of US at 22.8 per cent and Japan (23.1 per cent). But compared with China and Germany, the level of global economic integration achieved by India is significantly low.

In India it takes twice as long for starting a business, three times more cost for registration and double the time for enforcing a contract compared with China, the analysis states.

The Indian manufacturing sector is also plagued with low operating surplus manufacturing industries in competing neighbouring countries such as Indonesia, Malaysia and Korea.

The FICCI analysis shows that in 15 major manufacturing segments in India the share of operating surplus in the total value of output averages 15 per cent in India as compared to 22.6 per cent in Malaysia, 29.4 per cent in Indonesia and 30.6 per cent in Korea.

In the case of India there was not even one single industry where the share of operating surplus in total output value was above 20 per cent. In contrast, 9 industrial segments in Malaysia had an operating surplus higher than 20 per cent and 14 manufacturing segments each in Korea and Indonesia.

The number of manufacturing industries with an operating surplus ranging between 10-20 per cent of the output value numbered 10 in India, 5 in Malaysia and one each in Korea and Indonesia.

Industries with operating surplus of less than 10 per cent of output value numbered 5 in India, one in Malaysia and zero in Korea and Indonesia.

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