Doing Business in India: Not Really Easy

Recently, blogger Vishal Gondal wondered how India could have 1000 startups. If one did a reality check, one would realize that hardly 5 or 6 startups would come up from a dozen IIMs or so. With such a dismal rate of new business taking birth, one would actually wonder where things going wrong, especially in an industry where recession has almost become the sole charioteer. He optimistically imagines a scenario where 30 startups per year would come up from cities like Bombay, Delhi, Bangalore, Hyderabad and Madras.

He also suggests graduates from b-schools elsewhere in India like Calcutta, Chandigarh etc could fill up the gap and within the next 5 years, there actually could be 1000 new startups in India. Unfortunately, this hope could be slightly naive considering the fact that zero startups are not exactly that, and they need money too. Even the small budget startups that the author talks about need capital of about 10,00,000 Rupees, or $20,000 (as he puts it himself) which is really difficult to acquire for a MBA graduate who is happy enough to take up a job that pays 300,000 Rupees per annum.

Ironically Economic Times reported that India slipped one place from 132 to 133 in terms of ease of doing business. The article mentioned that high start-up costs and rigidity in labour relations have stifled business growth. China, Indonesia and Taiwan have actually improved when compared with their performance last year. Except Afghanistan, than her. In fact, her arch rival Pakistan stands at a place of 85 and the flood prone Bangladesh stands at 119. Mere optimism usually does not work, and it is necessary to be aware of the ground reality which may be quite bitter, as in the case of India.

“Local angels” that the author talks about are just that, angels that actually do not exist in reality. Relying on Internet, Social Media, and foreign investment through networking might actually do wonders. Indian Web Startups is a site that lists a handful of new businesses that are actually worth checking out. Like many have opined that funding should not be a problem, it may actually be so. However, it depends on how open a person is to receiving the funds as India is not exactly a place where businesses can be started and expected to run smoothly.

Innovative methods including networking with entrepreneurs abroad, especially from countries like Botswana, Brazil and Bosnia & Herzegovina may help Indian entrepreneurs as they have succeeded in making successful business ventures despite political and ethnic turmoil, economic distress, and other impediments. In fact, talented Indians must consider investing in other countries like Bosnia & Herzegovina, Croatia, Serbia, Botswana, Brazil, Argentina, China and even Mongolia, where bureaucracy, red-tapism, corruption and other such hurdles are lesser and it is easier to do business.

A list of countries based on the ease of doing business.