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India is most over-regulated country in the world
India is most over-regulated country in the world: Survey - The Economic Times
India has topped a list of the most "over-regulated countries in the world" in a survey on Asian business and politics by Hong Kong-based Political and Economic Risk Consultancy Ltd (PERC).
The survey used responses from American executives about regulatory conditions in the United States to provide a benchmark against which to assess the Asian scores.
India was rated worst in terms of over-regulation, scoring 9.16 points out of 10, followed by China with 9.04 points, Japan in third position with 3.28 points and the US at fourth with 1.51 points.
Hong Kong received the best score in the survey of 0.98 point, while Singapore was second with 1.08 points, according to the survey done in the last quarter of 2010, based on responses from 1,370 executives.
In general, regulations were complex and non-transparent, while standards and certifications procedures were onerous in India, according to the PERC survey findings.
Foreign exchange, capital transactions and some credit operations were subject to approvals, restrictions and additional requirements that went far beyond what most other countries require, concluded the survey.
Even procedures for something as simple as getting a tourist visa were more cumbersome in India than was typical elsewhere, it pointed out.
It also cited specific examples from the World Bank's Doing Business Survey of why India's regulatory system deserves to be graded as poorly as it was. It can take a month-and-a-half to register property, almost 200 days to obtain a construction permit, over 1,400 days to enforce a contract and seven years to close a business.
"Documentation requirements for both exports and imports are onerous," the PERC survey pointed out.
"Labor requirements are strict and companies lack flexibility on hiring and firing workers," it concluded.
Regulations in the country were frequently not enforced, which raised the question of why they were on the books at all, noted the survey.
"In a recent scandal involving the telecommunications ministry's mishandling of a landmark allocation of mobile telephone spectrum, as many as 85 of 122 new licences which were bundled with the bandwidth allocation were issued to companies that did not have the required capital to seek bandwidth," the survey pointed out.
These companies "suppressed facts, disclosed incomplete information and submitted fictitious documents", according to the survey.
"Of course they could not have done so without the complicity of bureaucrats at the ministry, who overlooked qualification shortcomings and arbitrarily moved forward the cut-off date for applying by one week to favor some companies that had applied earlier, while leaving others out," it said.
over-regulation will hold down a country's economy rise.
India: bad for business?
India: bad for business? | beyondbrics | News and views on emerging markets from the Financial Times ? FT.com
Its no secret that doing business in India can be onerous, right from the simplest task of securing a visa to getting regulatory approval for land acquisition. Even government ministers speak of the burden of red tape.
And now, a new survey has crowned India as the most over-regulated country in a survey on Asian business and politics by Hong Kong-based Political and Economic Risk Consultancy (PERC).
India was rated worst in terms of over-regulation, scoring 9.16 points out of 10, followed by China with 9.04 points with Japan coming in third with 3.28 points. Hong Kong beat all other Asian investment destinations scoring the best at of 0.98 point, while Singapore was second with 1.08 points.
The survey carried out in the last quarter of 2010, was based on responses from 1,370 US executives about regulatory conditions in the US to provide a benchmark against which to assess the Asian scores.
According to the survey, Indian regulations are complex and lack in transparency. Standards and certifications procedures are also tedious. It can take up to two months to register property, almost 200 days to obtain a construction permit, over 1,400 to enforce a contract and seven years to close a business.
Documentation requirements for both exports and imports are onerous, the PERC survey pointed out. Labour requirements are strict and companies lack flexibility on hiring and firing workers, it added. Regulations in the country were frequently not enforced, leading PERC to question why they were on the books at all.
These are just a few factors preventing much-needed investment to India.
Higher levels of FDI are crucial for India to achieve its ambition of double-digit growth. Duvvuri Subbarao, Indias central bank governor, has warned that India needs a quantum step in investment if it is to propel its growth rate higher than the current 8.5 per cent.
But, its not all bad. The Ernst & Young India attractiveness survey published this week showed that half of all global business leaders interviewed were positive about the country, with 75 per cent per cent of global businesses who already conduct business in India indicating that they would expand their operations.
While the outlook for India is still bright, the country needs to push business-friendly national and state-level policies if it is to see significant investment in its growth story.
