Land acquisition, labour laws, tax issues impede investments
May 19 2014 , New Delhi
The Ease of Doing Business in India report by CII and KPMG identifies key areas for reforms which will enable doing business in India easier, including setting up of business, land acquisition, taxation and contract enforcement.
Approvals related to environment clearances, land procurement, construction permits, industrial safety permits and power connection are top five obstacles in starting a business, according to the report.
"Having an environment that facilitates entrepreneurship, promotes investments productivity and growth is critical for improving business climate in India. The vulnerability of our country's current standing in the Doing Business index means that reforms in these areas have become critical," KPMG CEO in India Richard Rekhy said.
According to the World Bank's Doing Business 2014 report, India is ranked 134 out of 189 countries in the overall ease of doing business.
CII Director General Chandrajit Banerjee said, "Indian industry hopes that the new Government would accord due importance to this extremely important and urgent agenda that would help churn the wheels of investment and growth".
The report observed that companies keen on setting up a business in India need to undergo a time-consuming and tedious process, with the average time taken to acquire land being 14 months.
On the taxation front, 90 per cent of the respondents are in favor of reduction in tax rates, while 92 per cent feel there are challenges in transfer pricing assessments. Most companies believe that the Indian direct tax regime is not conducive to fostering growth, therefore a reduction in corporate taxes could provide impetus to growth of business.
According to World Bank, India ranks 158 in terms of overall ease in tax payment out of 189 countries.
"There is a need to simplify complex tax processes and reduce the time taken for availing incentives. Taxation in India needs structural, operational and administrative reforms, the burden of tax compliance should be reduced besides enabling e-filing of all taxes," the report said.
The report is based on a survey conducted among Indian industries, followed with primary and secondary research to assess the present business regulatory environment in the country.