UK-India Business Council’s eighth annual report has put Maharashtra on top of the list of States on ease to do business. Maharashtra has been the highest-rated State in the operating environment, followed by Gujarat, Chandigarh, Haryana, Himachal Pradesh, Andhra Pradesh, and Uttar Pradesh.
The report titled ‘Doing Business in India: The UK Perspective’ released last month adds that with a range of 3.33 to 2.16 (out of 5), businesses perceive a significant gap between the States.
Tamil Nadi, Uttarakhand and Puducherry are among the top ten States/UTs for ease of doing business for UK players.
Jammu and Kashmir is at the bottom of the list with (a 2.16 score). While North Eastern States dominate the list from the bottom, Bihar features among these States, which score low on ease of doing business.
“This discrepancy highlights the room for improvement for those States that scored less well to attract international investors. This ‘competitive federalism’ can be an engine for improvement across all States,” the report added.
They recommend that Indian States must align their industrial development plans with national policy to attract international investment while playing to their particular strengths.
The findings of this report are derived from an extensive survey of 111 UK businesses and higher education institutions to shed light on the operating environment in India.
Challenges UK players are facing
“More than 600 UK companies are deeply established in India and keen to enhance their investments and partner with Indian organisations. The full potential of the relationship, and truly both countries’ respective economies, will be fully realised by continual reform and bureaucratic efficiencies,” the report adds.
The report mentioned that “India at times remains a complex country in which to do business”.
On challenges, ‘Legal and regulatory impediments’ remains the greatest barrier perceived by UK businesses in India – selected by 56 per cent of businesses surveyed. ‘Goods and services tax’, ‘import tariff barriers’, and ‘export-import laws and regulations’ were the most noted legal and regulatory barriers.
Improving the turnaround time of approvals and bureaucratic processes’ is the most desired reform by the UK businesses – as chosen by 54 per cent of businesses surveyed. Simplification of the GST processes and increasing regulatory certainty were also frequently desired reforms.
Regarding India’s strengths, ‘telecommunication facilities’ and the ‘availability of skilled labour’ are the highest scoring.
The size of the Indian consumer market ranked as the most important, selected by 65 per cent of businesses that attracted them to India. Request for products or services from customers features second in the reasons that attract UK business in India.
The report states “India has made huge progress on the ease of doing business in recent years under the Prime Minister Narendra Modi and reform-minded State Governments, making India a stronger economy and a more attractive destination for foreign investment”.