Hyderabad is the best place for business

Believe it or not, doing business in Patna, Ranchi and even Lucknow is easier than in Mumbai and Kolkata. That’s the conclusion drawn by multi-lateral funding agency World Bank in its latest report on business friendliness.

The report titled Doing Business in South Asia, released on Tuesday, ranks Kolkata last among the 12 major cities in India. Hyderabad tops the charts, followed by Bangalore and Jaipur. Mumbai is second from the bottom with Kolkata saving it from total embarrassment. Bhubaneshwar, Chandigargh, Chennai, Lucknow, New Delhi, Patna and Ranchi are ranked in the middle. “Large urban centres like Kolkata and Mumbai are struggling because the high volume of business is causing regulatory and administrative bottlenecks,’’ said Caralee McLiesh, an author of the report.

Doing Business tracks a set of regulatory indicators related to business start-up, operation, trade, payment of taxes, and closure by measuring the time and cost associated with various government requirements. It tracks the rules and regulations relating to 10 indicators of doing business and does not measure differences in actual enforcement and implementation of rules, regulations, and procedures. It does not track variables such as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.

“Different local-level regulatory requirements, as well as differences in implementation of national-level regulations, either enhance or constrain local business activity and causes substantial differences in the ease of doing business among Indian cities,’’ McLiesh said. For example, it takes only 35 days to register a property in Hyderabad against anywhere between 99 to 219 days in Kolkata. In Patna, it takes 119 days.

It takes 85 days for a medium-size company to start business in Kolkata. That contrasts with 45 days in Jaipur and 42 days in Patna and 50 days in Hyderabad. ‘India has improved on 5 counts’ Kolkata: A World Bank study has ranked Mumbai and Kolkata at the bottom of Indian cities to do business in. In dealing with licences, Bhubaneswar is the most efficient with just 122 days required for a medium-sized company. In Hyderabad, it takes 148 days. In comparison, it takes a whopping 388 days to get the requisite licences in Kolkata. Even in Patna, it takes less time at 226 days.

In Bhubaneswar, 85.4% of a medium-sized company’s profit has to be paid as tax. In Kolkata, the tax outgo is higher at 86.7% of the profit. It is 87.8% in Hyderabad and 89.1% in Patna. In Bhubaneswar, 59 tax payments are required to be made in a year. The figure is 60 each in Kolkata and Hyderabad and 63 in Patna. Incidentally, India on the whole has made significant improvements in reducing the amount of red tape entrepreneurs face daily. It now takes 35 days to register a business in Mumbai against 71 days a year ago and 89 days in 2004.

“Despite clear improvements in five out of 10 Doing Business indicators, India can do much better. By broadly adopting best practices in business regulation that already exist within the country, India could jump significantly in the global Doing Business rankings, well ahead of other emerging markets like China,’’ McLiesh said. India is ranked 134 among 175 countries. For India to jump 55 places in the ease of Doing Business rankings, the country will need to adopt Jaipur’s regulations on starting a business, Bhubaneshwar’s rules on contract enforcement and taxes and Chennai’s trade practices. Adopting these would move India’s current global ranking from 134 to 79.

In the current report, China is ranked 92. In South Asia, Maldives leads the ranking at 53 with Pakistan at 74. Bangladesh is ranked 88, Sri Lanka 89 and Nepal 100. Only Bhutan at 138 and Afghanistan at 162 are behind India.