A production start-up of 83.6 days on average was required to obtain land, 58.7 days for construction permits, 44 days for an electrical connection and 30.2 days for a water connection, that the company faced a average 33.6 hours of electricity shortage and 33 hours of water shortages per month, found the first “Ease of Doing Business Report” compiled by NITI Aayog, the government’s expert group and the IDFC Institute, a a public policy think tank based in Mumbai. “If India is going to enter the” double digit “economic growth club, it will be clearly necessary to rationalize and improve the business environment,” the report said.
The survey, which included both start-ups (start-ups during or after 2014) and older companies, found that the process of obtaining approvals was easier for start-ups, setting up a business has become faster in recent years According to the report, it took 83.6 days on average to start getting land compared to the 118.3 days when companies were created before 2014. It took 58.7 days to obtain construction permits, and 75.5 days to not start, the survey revealed.
In comparison, it took 18.5 days to start a new business and 79 days to process construction permits in Kuala Lumpur, the capital of Malaysia, according to the World Bank’s Doing Business report of 2017 (Note: NITI research Aayog investigations and the World Bank are not comparable because they both use different methodologies.) This NITI Aayog survey-based survey of 3,276 manufacturing companies in the formal sector, including 141 start-ups in 23 manufacturing categories conducted by Kantar-IMRB, a market research agency in 2016. The survey covered all states and territories of the union, except Arunachal Pradesh, Mizoram, Lakshadweep and Andaman and Nicobar.
The survey also included interviews with lawyers, accountants and company secretaries in several states, and had a much broader scope than doing World Bank business surveys, which focus only on Delhi and Mumbai. Start-up required fewer days for most approvals, such as land allocation, building permits, and obtaining a water, electricity or sewer connection, but for longer periods of time to achieve environmental protection environment to obtain the research. The shorter approval time can be explained in part by the fact that most start-ups were in high-growth states, where approvals are faster than the rest of the country.
However, approvals were faster for start-ups than older companies in other states, according to the survey, suggesting that, in general, the founding time of a business declined. “Businesses in high-growth states are much less likely to report large or very serious barriers to land and building approvals, environmental approvals, and the availability of water and sanitation compared to companies located in low-growth states” , the report said. High-growth states are those with growth rates that are higher than or equal to the average growth rate between 2004-05 and 2013-14.
Companies in high-growth countries report a 25 percent less electricity shortage in a typical month compared to companies in low-growth states. Firms with more than 100 employees also took much longer, reported higher costs for required approvals, and were more likely to complain that regulatory barriers hindered firms than small businesses with fewer than 10 employees. This indicates that it remains very difficult for companies to increase or grow, according to the report, and could explain why companies in India are very small, with 98.6% of non-agricultural establishments employing fewer than 10 workers, according to the latest economic census of 2013-2014.
One of the “surprising” results, according to the report, was the low level of awareness among companies regarding single-state cut-and-fill systems established by governments. “On average, only about 20% of new companies, which are of recent origin, reported using one-stop shops to establish a business,” the report said.Less than half (41%) of the experts knew the existence of these facilities. The time needed to resolve legal disputes varies considerably from one or two to the other, according to the survey. The average time for a case was 598 days or 1.6 years in the civil court, while the average time for which a case was still pending was 1,304 days or 3.6 years. The survey also found that the largest source of financing for a company comes from savings saved by the company (35%), followed by bank loans (32%) and personal savings (25%).